Concept explainers
Concept introduction
A procedure of paying off all the liabilities of the partnership firm, selling out all the respective assets of the partnership firm and then distribution of the remaining assets and the cash when the partnership business is going out of the business is known as partnership liquidation.
To prepare: The amount of the available cash distributed to partner B when the receivables and the inventory were liquidated for
Answer to Problem 6E
The amount of available cash available for the distribution to the partner B is
Explanation of Solution
Details | cash | Noncash assets | Liabilities | Loan from A | A | B | C |
Starting balance | |||||||
Liquidation of receivables and inventory | |||||||
Liabilities due | |||||||
Remaining noncash assets loss | |||||||
balance |
Concept introduction
Partnership liquidation
A procedure of paying off all the liabilities of the partnership firm, selling out all the respective assets of the partnership firm and then the distribution of the remaining assets and the cash when the partnership business is going out of the business is known as partnership liquidation.
To prepare: The amount of the available cash distributed to partner B when all the non-cash assets other than equipment were sold for
Answer to Problem 6E
There is no amount of available cash available for the distribution to the partner B.
Explanation of Solution
Details | Cash | Noncash asset | Liabilities | Loan from A | A | B | C |
Initial balance | |||||||
Sale of non-cash assets | |||||||
Payment of liabilities | |||||||
Amount | |||||||
Retain cash of | |||||||
balances |
Concept introduction
Partnership liquidation
A procedure of paying off all the liabilities of the partnership firm, selling out all the respective assets of the partnership firm and then the distribution of the remaining assets and the cash when the partnership business is going out of the business is known as partnership liquidation.
To prepare: The amount of the available cash distributed to partner B when non-cash assets with a book value
Answer to Problem 6E
The amount of available cash that would be distributed to partner B is
Explanation of Solution
details | Cash | Noncash assets | Liabilities | Loan from A | A | B | C |
Initial balance | |||||||
Sale of noncash asset | |||||||
Payment of liability | |||||||
Payment of loan from A | |||||||
The maximum loan on remaining noncash asset | |||||||
Retain cash of | |||||||
Balance | |||||||
Absorption of A’s deficit balance | |||||||
Net balance |
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Chapter 14 Solutions
Advanced Accounting
- The partnership of Tatum and Brook shares profits and losses in a 60:40 ratio respectively after Tatum receives a 10,000 salary and Brook receives a 15,000 salary. Prepare a schedule showing how the profit and loss should be divided, assuming the profit or loss for the year is: A. $40,000 B. $25,000 C. ($5,000) In addition, show the resulting entries to each partners capital account. Tatums capital account balance is $50,000 and Brooks is $60,000.arrow_forwardSTATEMENT OF PARTNER SHIP LIQUIDATION WITH LOSS After several years of operations, the partnership of Delco, Smith, and Walker is to be liquidated. After making closing entries on March 31, 20--, the following accounts remain Open. The noncash assets are sold for 165,000. Profits and losses are shared equally. REQUIRED 1. Prepare a statement of partnership liquidation for the period April 115, 20--, showing the following: (a) The sale of noncash assets on April 1 (b) The allocation of any gain or loss to the partners on April 1 (c) The payment of the liabilities on April 12 (d) The distribution of cash to the partners on April 15 2. Journalize these four transactions in a general journal.arrow_forwardWhen a partnership dissolves, the last step in the dissolution process is to ________. A. allocate the gain or loss on sale based on income sharing ratio B. pay off liabilities C. sell noncash assets D. divide the remaining cash among the partnersarrow_forward
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