ADVANCED ACCOUNTING
14th Edition
ISBN: 9781307664089
Author: Hoyle
Publisher: MCG/CREATE
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Chapter 15, Problem 7P
To determine
Identify the correct option for finding the amount of cash that each partner receives as a result of the liquidation.
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A condensed balance sheet for a partnership to be liquidated is as follows:(attached)The profit and loss percentages for Partners A, B, and C are 50%, 30%, and 20%, respectively. For each of the following independent scenarios, determine how much of the available cash, with the exception of $10,000, would be distributed to Partner B.1. Assume that the receivables and the inventory were liquidated for $140,000 cash.2. Assume that all noncash assets other than equipment were sold for $53,000 cash.3. Assume that noncash assets with a book value of $300,000 were sold for $250,000 cash and that a distribution to Partner A was made in order to pay off the loan payable to them.
A partnership has the following balance sheet prior to liquidation (partners' profit and loss ratios are in parentheses):
$ 33,000
100,000
Cash
Other assets
Total
$ 133,000
Beginning balances
Sale of assets
Pay liabilites
Pay liquidation expenses
Subtotal
Distribution to partners
Ending balances
Liabilities
Playa, capital (40%)
Bahia, capital (30%)
Arco, capital (30%)
Total
During liquidation, other assets are sold for $80,000, liabilities are paid in full, and $15,000 in liquidation expenses are paid.
Required:
Prepare a statement of partnership liquidation to determine the amount of cash each partner receives as a result of this liquidation.
Note: Amounts to be deducted should be entered with a minus sign.
PLAYA, BAHIA, AND ARCO PARTNERSHIP
Statement of Partnership Liquidation
Other Assets Liabilities
$ 50,000
24,000
29,000
30,000
$ 133,000
Cash
Playa, Capital Bahia, Capital Arco, Capital
(40%)
(30%)
(30%)
The ABC Partnership is to be liquidated. The ledger shows the following:
Cash $ 70,000
Noncash Assets 220,000
Liabilities 90,000
A, Capital 85,000
B, Capital 90,000
C, Capital 25,000
A,B, and C's income ratios are 5:3:2, respectively. The non-cash assets are sold for $170,000.
Instructions
Prepare a schedule of liquidation using the following chart:
Cash NC assets Liabilities A, Cap B, Cap C, Cap
Beg Balance
Sale of assets
Balance
Pay liabilities
Balance
Distribute cash
End Balance
Prepare the 4…
Chapter 15 Solutions
ADVANCED ACCOUNTING
Ch. 15 - Prob. 1QCh. 15 - Prob. 2QCh. 15 - Prob. 3QCh. 15 - Prob. 4QCh. 15 - What is the purpose of a statement of liquidation?...Ch. 15 - Prob. 1PCh. 15 - Prob. 2PCh. 15 - Prob. 3PCh. 15 - Prob. 4PCh. 15 - A partnership is considering possible liquidation...
Ch. 15 - What is a predistribution plan? a. A list of the...Ch. 15 - Prob. 7PCh. 15 - Prob. 8PCh. 15 - Prob. 9PCh. 15 - Prob. 10PCh. 15 - Prob. 11PCh. 15 - Prob. 12PCh. 15 - Prob. 13PCh. 15 - Prob. 14PCh. 15 - Prob. 15PCh. 15 - Prob. 16PCh. 15 - Prob. 17PCh. 15 - Prob. 18PCh. 15 - Prob. 25PCh. 15 - Prob. 26PCh. 15 - March, April, and May have been in partnership for...Ch. 15 - Prob. 28PCh. 15 - Prob. 29P
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