Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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The following balance sheet is for a local partnership in which the partners have become very unhappy with each other.
To avoid more conflict, the partners have decided to cease operations and sell all assets. Using this information, answer the following questions. Each question should be viewed as an situation related to the partnership’s liquidation.
The $10,000 cash that exceeds the partnership liabilities is to be disbursed immediately. If profits and losses are allocated to Adams, Baker, Carvil, and Dobbs on a 2:3:3:2 basis, respectively, how will the $10,000 be divided?
The $10,000 cash that exceeds the partnership liabilities is to be disbursed immediately. If profits and losses are allocated on a 2:2:3:3 basis, respectively, how will the $10,000 be divided?
The building is immediately sold for $70,000 to give total cash of $110,000. The liabilities are then paid, leaving a cash balance of $80,000. This cash is to be distributed to the partners. How much of this money will each…
The partnership of Winn, Xie, Yang, and Zed has the following balance sheet:
Zed is personally insolvent, and one of his creditors is considering suing the partnership for the $10,000 that is currently owed. The creditor realizes that this litigation could result in partnership liquidation and does not wish to force such an extreme action unless Zed is reasonably sure of obtaining at least $10,000 from the liquidation.
Determine the amount for which the partnership must sell the other assets to ensure that Zed receives $10,000 from the liquidation. Liquidation expenses are expected to be $30,000.
The partnership of Anderson, Berry, Hammond, and Winwood is being liquidated. It currently holds cash of $20,000 but no other assets. Liabilities amount to $30,000. The capital balances are
If both Hammond and Winwood are personally insolvent, how much money must Berry contribute to this partnership?
If only Winwood is personally insolvent, how much money must Hammond contribute to the partnership? How will these funds be disbursed?
If only Hammond is personally insolvent, how much money should Anderson receive from the liquidation?
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- A client of yours is considering investing in a partnership and has been analyzing the financial statements of the partnership. Their analysis has resulted in the following observations that that they are hoping you could address: 1. The balance sheet does not set forth the capital stock account at par value, which would define some level of minimum legal liability. 2. The balance sheet does not include any accrual for either state or federal income taxes even though the partnership reported pretax income. 3. In analyzing the income statement, your client noted that no salaries to partners were listed as an expense even though they know that existing partners received a salary from the partnership. 4. Interest on a partner’s capital balance is used as a means of allocating profits; however, no such interest appears on the income statement. Provide a response to each of your client’s observations regarding the partnership’s financial statements.arrow_forwardEnter problem statement, appropriate input type, and other instructions here. Elyn is the general partnera and Danny is the limited partner in ED Limited partnership. The partnership has bomowed on a recourse basin to finance its operations. The partnership agreement provides that the partnership will maintain capital accounts in conformity with IRS regulations, upon liquidation of the partnership each partner will receive the postive balance in their capital accounts. Elyn as general partner must make up any deficit in her capital acoount upon partnership liquidation. Darvy as limited partner is not obligated to make up any deficit in his capital account upon partnershp liquidation. The partnership agreement provides that Ellyn is to receive 25 % of all partnership profits and losses and Daany is to receive 75 % of all partnership profits and losses. On December 31. 2020 Ellyn has a positive capital account of $100.000 and Danny has a positive capital account of $300,00a The…arrow_forwardHi, I don't know how to prepare a predistribution plan for this partnership. Please help me. Take a look at the photo with my problem. The partnership of Butler, Osman, and Ward was formed several years ago as a local tax preparation firm. Two partners have reached retirement age, and the partners have decided to terminate operations and liquidate the business. Liquidation expenses of $43,000 are expected. The partnership balance sheet at the start of liquidation is as follows: Cash $39,000 Liabilities $179,000 Accounts receivable 69,000 Butler, loan 39,000 Office equipment (net) 59,000 Butler, capital (25%) 95,000 Building (net) 155,000 Osman, capital (25%) 39,000 Land 145,000 Ward, capital (50%) 115,000 Total assets $467,000 Total liabilities and capital $467,000 Prepare a predistribution plan for this partnership Butler, Loan and Capital Osman, Capital Ward, Capital Beginning…arrow_forward
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