Principles of Accounting Volume 1
19th Edition
ISBN: 9781947172685
Author: OpenStax
Publisher: OpenStax College
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Chapter 15, Problem 4EA
Cheese Partners has decided to close the store. At the date of closing, Cheese Partners had the following account balances:
A competitor agrees to buy the inventory and store fixtures for $20,000. Prepare the
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Cheese Partners has decided to close the store. At the date of closing, Cheese Partners had the following account balances:
Capital
$8,000
Cash
8,000
Inventory
12,000
Store fixtures
8,000
Accounts payable
22,000
A competitor agrees to buy the inventory and store fixtures for $15,000.
Prepare the journal entries detailing the liquidation, assuming that partners Colette and Swarma are sharing profits on a 50:50 basis. If an amount box does not require an entry, leave it blank.
Cheese Partners has decided to close the store. At the date of closing, Cheese Partners had the following account balances:
Capital
$8,000
Cash
6,000
Inventory
12,000
Store fixtures
8,000
Accounts payable
22,000
A competitor agrees to buy the inventory and store fixtures for $15,000.
Prepare the journal entries detailing the liquidation, assuming that partners Colette and Swarma are sharing profits on a 50:50 basis. If an amount box does not require an entry, leave it blank.
Cash
Cash
Loss on Sale
Loss on Sale
Inventory
Inventory
Store Fixtures
Store Fixtures
Colette, Capital
Colette, Capital
Swarma, Capital
Swarma, Capital
Loss on Sale
Loss on Sale
Accounts Payable
Accounts Payable
Cash
Cash
Colette, Capital
Colette, Capital
Swarma, Capital
Swarma, Capital
Cash
Cash
On May 1, Soriano Co. reported the following account balances along with their estimated fair values:On that day, Zambrano paid cash to acquire all of the assets and liabilities of Soriano, which will cease to exist as a separate entity. To facilitate the merger, Zambrano also paid $100,000 to an investment banking firm.The following information was also available:• Zambrano further agreed to pay an extra $70,000 to the former owners of Soriano only if they meet certain revenue goals during the next two years. Zambrano estimated the present value of its probability adjusted expected payment for this contingency at $35,000.• Soriano has a research and development project in process with an appraised value of $200,000. However, the project has not yet reached technological feasibility and the project’s assets have no alternative future use.Prepare Zambrano’s journal entries to record the Soriano acquisition assuming its initial cash payment to the former owners wasa. $700,000.b.…
Chapter 15 Solutions
Principles of Accounting Volume 1
Ch. 15 - A partnership ________. A. has one owner B. can...Ch. 15 - Any assets invested by a particular partner in a...Ch. 15 - Which of the following is a disadvantage of the...Ch. 15 - Mutual agency is defined as: A. a mutual agreement...Ch. 15 - Chani contributes equipment to a partnership that...Ch. 15 - Juan contributes marketable securities to a...Ch. 15 - Which one of the following would not be considered...Ch. 15 - A well written partnership agreement should...Ch. 15 - What type of assets may a partner not contribute...Ch. 15 - How does a newly formed partnership handle the...
Ch. 15 - Thandie and Marco are partners with capital...Ch. 15 - Thandie and Marco are partners with capital...Ch. 15 - Thandie and Marco are partners with capital...Ch. 15 - Thandie and Marco are partners with capital...Ch. 15 - When a partnership dissolves, the first step in...Ch. 15 - When a partnership dissolves, the last step in the...Ch. 15 - Prior to proceeding with the liquidation, the...Ch. 15 - Does a partnership pay income tax?Ch. 15 - Can a partners personal assets in a limited...Ch. 15 - Can a partnership assume liabilities as part of...Ch. 15 - Does each partner have to contribute an equal...Ch. 15 - What types of bases for dividing partnership net...Ch. 15 - Angela and Agatha are partners in Double A...Ch. 15 - On February 3, 2016 Sam Singh invested $90,000...Ch. 15 - Why do partnerships dissolve?Ch. 15 - What are the four steps involved in liquidating a...Ch. 15 - When a partner withdraws from the firm, which...Ch. 15 - What is the first step in a partnership...Ch. 15 - When a partnership liquidates, do partners get...Ch. 15 - Coffee Partners decides to close due to the...Ch. 15 - On May 1, 2017, BJ and Paige formed a partnership....Ch. 15 - The partnership of Chase and Chloe shares profits...Ch. 15 - The partnership of Tasha and Bill shares profits...Ch. 15 - Cheese Partners has decided to close the store. At...Ch. 15 - The partnership of Michelle, Amal, and Maureen has...Ch. 15 - The partnership of Tatum and Brook shares profits...Ch. 15 - Arun and Margot want to admit Tammy as a third...Ch. 15 - When a partnership is liquidated, any gains or...Ch. 15 - The partnership of Magda and Sue shares profits...Ch. 15 - The partnership of Arun, Margot, and Tammy has...Ch. 15 - Match each of the following descriptions with the...Ch. 15 - While sole proprietorships and corporations are...Ch. 15 - A partnership is thriving. The three partners get...
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- The partnership of Frick, Wilson, and Clarke has elected to cease all operations and liquidate its business property. A balance sheet drawn up at this time shows the following account balances: Cash - $66,000 Noncash - $231,000 Liabilities - $46,000 Frick, capital (60%) - $135,000 Wilson, capital (20%) - $37,000 Clarke, capital (20%) - $79,00 Prepare journal entries to record the liquidation transactions reflected in the final statement of liquidation.arrow_forwardLester, Torres, and Hearst are members of Arcadia Sales, LLC, sharing income and losses in the ratio of 2:2:1, respectively. The members decide to liquidate the limited liability company. The members' equity prior to liquidation and asset realization on August 1 are as follows: Lester $28,800 Torres 66,600 Hearst 41,400 Total $136,800 In winding up operations during the month of August, noncash assets with a book value of $180,000 are sold for $223,200, and liabilities of $58,800 are satisfied. Prior to realization, Arcadia Sales has a cash balance of $15,600.arrow_forwardLester, Torres, and Hearst are members of Arcadia Sales, LLC, sharing income and losses in the ratio of 2:2:1, respectively. The members decide to liquidate the limited liability company. The members’ equity prior to liquidation and asset realization on August 1 are as follows: Lester $ 49,000 Torres 61,000 Hearst 27,000 Total $137,000In winding up operations during the month of August, noncash assets with a book value of $146,000 are sold for $158,000, and liabilities of $35,000 are satisfied. Prior to realization, Arcadia Sales has a cash balance of $26,000.a. Prepare a statement of LLC liquidation.b. Provide the journal entry for the final cash distribution to members.c. What is the role of the income- and loss-sharing ratio in liquidating an LLC?arrow_forward
- The partnership of Folly and Frill is in the process of liquidation. On January 1, 2021, the booksshow account balances as follows:Cash 10,000 Accounts Payable 15,000Accounts Receivable 25,000 Folly Capital 40,000Lumber Inventory 40,000 Frill Capital 20,000On January 10, 2021, the lumber inventory is sold for $25,000. During January, AccountsReceivable of $21,000 are collected. No further collections on the receivables are expected.Profits are shared 60% to Folly and 40% to Frill.1) Compute the final distribution to Folly2) Compute the final distribution to Frillarrow_forwardLester, Torres, and Hearst are members of Arcadia Sales, LLC, sharing income and losses in the ratio of 2:2:1, respectively. The members decide to liquidate the limited liability company. The members’ equity prior to liquidation and asset realization on August 1 are as follows: Lester $48,550 Torres 57,430 Hearst 29,680 Total $135,660 In winding up operations during the month of August, noncash assets with a book value of $154,940 are sold for $166,430, and liabilities of $47,780 are satisfied. Prior to realization, Arcadia Sales has a cash balance of $28,500. Required: a. Prepare a statement of LLC liquidation. For those boxes in which you must enter negative numbers (balance deficiencies, payments, cash distributions, divisions of loss), use a minus sign. If there is no amount to be reported for sale of assets, payment of liabilities, receipt of deficiency, or cash distribution rows, the cell can be left blank. However, in the balance rows, a balance of…arrow_forwardLester, Torres, and Hearst are members of Arcadia Sales, LLC, sharing income and losses in the ratio of 2:2:1, respectively. The members decide to liquidate the limited liability company. The members’ equity prior to liquidation and asset realization on August 1 are as follows: Lester $53,120 Torres 55,790 Hearst 26,560 Total $135,470 In winding up operations during the month of August, noncash assets with a book value of $157,550 are sold for $170,590, and liabilities of $47,430 are satisfied. Prior to realization, Arcadia Sales has a cash balance of $25,350. Required: a. Prepare a statement of LLC liquidation. Refer to the list of Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter negative numbers (balance deficiencies, payments, cash distributions, divisions of loss), use a minus sign. If there is no amount to be reported for sale of assets, payment of liabilities, receipt of deficiency,…arrow_forward
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