Concept explainers
Liquidation of
To choose:the correct answer to determine amount received by J on liquidation
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Chapter 16 Solutions
ADVANCED FINANCIAL ACCOUNTING IA
- SHOW YOUR SOLUTION IN GOOD ACCOUNTING FORM: The ETO Partnership is in the process of liquidation. The account balances prior to liquidation are given below: The partners share profits in the following ratio: Aurora, 1/6; Esteban, 2/6; and Tyro, 3/6. Upon liquidation of the partnership, Aurora should have received:arrow_forwardA partnership has the following balance sheet prior to liquidation (partners’ profit and loss ratios are in parentheses): During liquidation, other assets are sold for $80,000, liabilities are paid in full, and $15,000 in liquidation expenses are paid. What amount of cash does each partner receive as a result of this liquidation? Playa, $6,000; Bahia, $4,500; Arco, $4,500. Playa, $10,000; Bahia, $18,500; Arco, $19,500. Playa, $16,000; Bahia, $23,000; Arco, $24,000. Playa, $19,200; Bahia, $14,400; Arco, $14,400.arrow_forwardWrite a Sample Format of Statement of Liquidation (Lump Sump) Other Instruction (Assumptions) 1. Values should be written as XXX if positive and (XXX) if negative 2. 7 Partners [JJ, Simon, Harry, Vik, Josh, Ethan and Tobi] 3. There is a gain in the realization of assets 4. There is liquidation expense. 5. Simon has receivables from partnership. 6. Ethan and Tobi have payables to the partnership (Non-anonymous question) *arrow_forward
- Maddie is a partner in M&M Partnership. Her outside basis is $182,500, when she receives a liquidating distribution of $45,625 cash and a proportionate share of inventory having a partnership basis of $63,875 and a fair market value of $73,000. The distribution results in a liquidation of both the partnership and her interest. What is Maddie's basis in the inventory received? Answer:_________arrow_forwardUse the following information for the next two questions: Farewell Partnership is undergoing liquidation. Information on Farewell follows: Cash 40,000 Accounts receivable 180,000 Receivable from B 10,000 Inventory 160,000 Equipment 310,000 Total 700,000 Accrued liabilities 250,000 Payable to A 20,000 A, Capital (60%) 240,000 B, Capital (40%) 190,000 Total 700,000 Case #1: Lump-sum liquidation Information on the conversion of non-cash assets is as follows: Only 60% of the accounts receivable was collected; the balance is uncollectible. ₱50,000 was received for the entire inventory. The equipment was sold at its carrying amount. ₱10,000 Liquidation expenses were paid. Requirement: Determine the amounts of cash distributed to the partners in the final settlement of their capital…arrow_forwardKendra, Cogley, and Mei share income and loss in a 3:2:1 ratio (in ratio form: Kendra, 3⁄6; Cogley, 2⁄6; and Mei, 1⁄6). The partners have decided to liquidate their partnership. On the day of liquidation, their balance sheet appears as follows. Required Prepare journal entries for (a) the sale of inventory, (b) the allocation of its gain or loss, (c) the payment of liabilities at book value, and (d) the distribution of cash in each of the following separate cases: Inventory is sold for (1) $600,000; (2) $500,000; (3) $320,000 and partners with deficits pay their deficits in cash; and (4) $250,000 and partners with deficits do not pay their deficits. (Round to the nearest dollar.)arrow_forward
- Three partners decided to liquidate their partnership. In accordance with their 3:2:1 income ratio, during step 2 of the process, partner 1 was allocated $7,500, partner 2 was allocated $5,000, and partner 3 was allocated $2,500. The total cash assets for the company at the time of liquidation totaled $9,000. How much was the gain during step 1 of the liquidation process? 1.$9,000 2.$15,000 3.$6,000 4.$24,000arrow_forwardThe partnership of Donald, Healey & Jaguar has experienced operating losses. The partners—who have shared profits and losses in the ratio of Donald, 10%; Healey, 30%; and Jaguar, 60%—are liquidating the business. They ask you to analyze the effects of liquidation and present the following partnership balance sheet at December 31, end of the current year: Requirements 1. Prepare a summary of liquidation transactions (as illustrated in Exhibit 12-5). The noncash assets are sold for $192,000. 2. Journalize the liquidation transactions.arrow_forwardPartner Walton receives a distribution of partnership property that is in complete liquidation of his partnership interest. His outside basis at the time of the distribution is $50,000. The properties he receives are the following: 1) Cash of $20,000 2) Liability release of $15,000 3) Inventory with a fair market value of $18,000 and an inside basis to the partnership of $10,000. SELECT ALL OF THE TRUE STATEMENTS FROM THE LIST BELOW!! He has no gain or loss on this distribution He has a loss of $5,000 on the distribution He has an outside basis of $0 after this distribution and no more interest in the partnership His basis in the inventory is $10,000 His basis in the inventory is $15,000arrow_forward
- A partnership has gone through liquidation and now reports the following account balances: Profits and losses are allocated on the following basis: Wayman, 30 percent; Jones, 20 percent; Fuller, 30 percent; and Rogers, 20 percent. Which of the following events should occur now? Jones should receive $3,000 cash because of the loan balance. Fuller should receive $11,800 and Rogers $4,200. Fuller should receive $10,600 and Rogers $5,400. Jones should receive $3,000, Fuller $8,800, and Rogers $4,200.arrow_forwardWhat amount must the remaining assets be sold in order for Julia to receive P197,500 after liquidation? * Gerald, Julia and Bea are partners who decided to terminate their partnership due to misunderstanding. Total assets of the partnership is P480,000 including cash of P30,000. Capital balances of the partners were as follows Gerald P150,000; Julia P175,000; Bea P67,500. Unpaid liabilities amounted to P87,500. Assets with a book value of P175,000 were sold for P125,000 and the cash was distributed. The P/L ratio is 5:3:2arrow_forwardThe financial position of the partnership Marie, Shey, Allan and Roi, just prior to liquidation shows: Marie, Loan 25,000 Marie, Capital 137,500 Shey, capital 128,750 Allan, capital 171,250 Roi, Capital 112,500 The partners share profits and losses on a 4:3:2:1 ratio, respectively. Certain assets are sold for P150,000 and is distributed to partners. How much cash should Allan receive? Group of answer choices 67,917 0 82,083 150,000arrow_forward