Concept explainers
Installment liquidation: It typically requires several months to complete liquidation, it includes installment, payments to partners during liquidation period because they require funds for the personal purposes. Most liquidations take place over an extended period in order to obtain the large possible amount from the realization of the assets. Some
Installment liquidations involve distributing cash to partners before complete liquidation of assets occurs. To ensure fairness in making cash distributions a schedule of safe payments to partners and the cash distribution plan is followed.
To choose:Correct answer and show how final cash distribution to the partners is done.
![Check Mark](/static/check-mark.png)
Want to see the full answer?
Check out a sample textbook solution![Blurred answer](/static/blurred-answer.jpg)
Chapter 16 Solutions
ADVANCED FINANCIAL ACCOUNTING IA
- When a partnership dissolves, the first 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_forwardWhen a partnership is liquidated, any gains or losses realized by the sale of noncash assets are allocated to the partners based on their income sharing ratio. Why?arrow_forwardStatement I: In the preparation of cash priority program, the partner who is most prone to losses is deemed to be the first priority in cash distribution. Statement II: In the case of partnership liquidation, when the partners’ interests are already in accordance with the P/L ratio, succeeding payments to the partners must be done in accordance with P/L. Group of answer choicesarrow_forward
- What is a predistribution plan? A list of the procedures to be performed during a liquidation. A guide for the cash distributions to partners during a liquidation. A determination of the final cash distribution to the partners on the settlement date. A detailed list of the transactions that will transpire in the reorganization of a partnership.arrow_forwardIn partnership liquidation the first cash distribution to the partner should be made in accordance with the        Select one: a. Ratio of the capital contribution by partners b.   Balances of partners' capital accounts c. Partners profit &loss ratios d. Safe payment schedulearrow_forwardIn the liquidation of a partnership, it is necessary to (1) distribute cash to the partners, (2) sell noncash assets,  (3) allocate any gain or loss on realization to the partners  and (4) pay liabilities. These steps should be performed in the following order Select one: a. (2), (3), (1), (4). b. (2), (3), (4), (1). c. (3), (2), (1), (4). d. (3), (2), (4), (1).arrow_forward
- In accounting for the lump-sum liquidation of a partnership, cash payments to partners after all non-partner creditors' claims have been satisfied, but before the final cash distribution should be according toa. the final balances in partner capital accounts.b. the partners' relative share of the gain or loss on liquidation.c. the partners' relative profit and loss sharing ratio.d. safe payment computations.arrow_forwardno need to explain. What is a cash priority program? a. A guideline for the cash distributions made to partners during a liquidation b. A list of the rules to be performed during a partnership dissolution c. A list of the transactions that will transpire in the reorganization of a partnership d. None of the abovearrow_forwardIn a partnership liquidation, the final cash payment to the partners should be made in accordance with the*a. balance of partners' capital accounts.b. partner's profit and loss sharing ratio.c. ratio of the capital contributions by partners.d. safe payment computations.arrow_forward
- In accounting for the lump-sum liquidation of a partnership, cash payments to partners after all non-partner creditors’ claims have been satisfied, but before the final cash distribution should be according to: a. Safe payment computations. b. The final balances in partner capital accounts. c. The partners’ relative profit and loss sharing ratio. d.The partners’ relative share of the gain or loss on liquidation.arrow_forwardIn a partnership liquidation, the final cash distribution to the partners should be made in accordance with the?arrow_forwardWhich of the following is correct with regards to partnership liquidation? a. All creditors must be paid in full before distributions can be made to partners b. Partners’ capital contributions and undistributed partnership income are viewed as distinct in the Uniform Partnership Act c. All creditors are equal with regards to priority claim against partnership assets d. Loans from partners to the partnership have same priority claim against partnership assets as to creditor claims from other entitiesarrow_forward
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeCollege Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337794756/9781337794756_smallCoverImage.gif)