ADVANCED FINANCIAL ACCOUNTING IA
12th Edition
ISBN: 9781260545081
Author: Christensen
Publisher: MCG
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Chapter 16, Problem 16.2.3E
To determine
Introduction: Installment liquidation involves selling assets of
To choose: Correct answer for the amount of cash distributed to each partner after settlement with creditors is distributed.
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Statement I: In lumpsum liquidation, the remaining cash available after realization and payment of liquidation expenses, will be equal to the total interest of the partners.Statement II: In installment liquidation, the partner who has the highest absorption capacity shall be prioritized in the payment of interest.
Group of answer choices
Both statements are false
Both statements are true
S1 is true; S2 is false
S1 is false; S2 is true
Partnership Dissolution
1. The partnership of A, B, & C agree to sell D one-fourth of their respective capital and profit and loss
interest in exchange for a total payment of P20,000. The partners capital balances and profit and loss ratio
are as follows: A (60%), P50,000; B (30%), P40,000; C (10%), P 20,000. If assets are to be revalued prior to
the admission of D, how much is the capital balances of A, B, C after admission of D?
2.The computation of sale or settlement of the share or interest in a partnership is the same in retirement,
withdrawal, insolvency/incapacity and death of any of the partners if:
a. If the sale or settlement is approved by all the remaining partners.
b. If sale or settlement is approved by the retiring, withdrawing partner or his administrator in case of
death or incapacity.
c. The partners have equal interest in the partnership.
d. All facts and circumstances are the same and the only distinction is the reason for disassociation.
3.Va and Vo form a…
Write 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 [Jk, V, RM, Jimin, Hobi, Jin and Suga] 3. There is a gain in the realization of assets 4. There is liquidation expense. 5. V has receivables from partnership. 6. Jin and Suga have payables to the partnership
Chapter 16 Solutions
ADVANCED FINANCIAL ACCOUNTING IA
Ch. 16 - What are the major causes of a dissolution? What...Ch. 16 - Prob. 16.2QCh. 16 - Prob. 16.3QCh. 16 - Prob. 16.4QCh. 16 - Contrast a lump-sum liquidation with an...Ch. 16 - Prob. 16.6QCh. 16 - Prob. 16.7QCh. 16 - Prob. 16.8QCh. 16 - Prob. 16.9QCh. 16 - Prob. 16.10Q
Ch. 16 - Prob. 16.11QCh. 16 - The installment liquidation process uses a...Ch. 16 - Prob. 16.13QCh. 16 - Prob. 16.14QCh. 16 - Prob. 16.15QCh. 16 - Cash Distributions to Partners Analysis The...Ch. 16 - Prob. 16.2CCh. 16 - Prob. 16.3CCh. 16 - Sharing Losses during Liquidation Research Hiller,...Ch. 16 - Prob. 16.1.1ECh. 16 - Prob. 16.1.2ECh. 16 - Prob. 16.1.3ECh. 16 - Prob. 16.1.4ECh. 16 - Prob. 16.1.5ECh. 16 - Prob. 16.1.6ECh. 16 - Prob. 16.1.7ECh. 16 - Prob. 16.2.1ECh. 16 - Prob. 16.2.2ECh. 16 - Prob. 16.2.3ECh. 16 - Prob. 16.2.4ECh. 16 - Prob. 16.2.5ECh. 16 - Prob. 16.2.6ECh. 16 - Prob. 16.3ECh. 16 - Prob. 16.4ECh. 16 - Prob. 16.5ECh. 16 - Prob. 16.6ECh. 16 - Prob. 16.7ECh. 16 - Prob. 16.8ECh. 16 - Confirmation of Cash Distribution Plan Refer to...Ch. 16 - Prob. 16.10ECh. 16 - Prob. 16.11.1AECh. 16 - Prob. 16.11.2AECh. 16 - Prob. 16.11.3AECh. 16 - Prob. 16.11.4AECh. 16 - Prob. 16.11.5AECh. 16 - Prob. 16.11.6AECh. 16 - Prob. 16.11.7AECh. 16 - Prob. 16.11.8AECh. 16 - Prob. 16.11.9AECh. 16 - Prob. 16.11.10AECh. 16 - Prob. 16.11.11AECh. 16 - Prob. 16.12AECh. 16 - Prob. 16.13PCh. 16 - Prob. 16.14PCh. 16 - Prob. 16.15PCh. 16 - Prob. 16.16PCh. 16 - Prob. 16.17PCh. 16 - Prob. 16.18PCh. 16 - Matching Terms Match the items in the left-hand...Ch. 16 - Prob. 16.20P
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- Write 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_forwardAfter Non-Cash Assets have been sold and liabilities paid, the final step in the liquidation process is to distribute the balance of Cash to the partners. Consider the following: Cash $20 A, Capital Balance $8 B, Capital Balance $12 Gains and losses are shared equally between the partners. Which of the following is correct? Group of answer choice a.B would receive$12 as the final payment of cash. b. B would receive $10 as the final payment of cash. c. B would receive $8 as the final payment of cash. d. B would receive $20 as the final payment of cash.arrow_forwardProblem 2. During liquidation, the Partnership of Pateno, Bautista and Apalisoc became insolvent. On Jan. 17, 2021, after all non-cash assets had been realized and all available cash had been distributed to creditors, the statement of financial position of the partnership is as follows: Liabilities and Partners' Capital: Accounts payable - Trade P60,000 120,000 Pateno, Capital Bautista, Capital -160,000 Apalisoc, Capital -20,000 P-0- Total liabilities & partners' capital The partners share profits and losses (including gains and losses in liquidaion) in the ratio 20%, 50% and 30%, respectively. On Jan. 17, 2021, the personal financial positions of the partners were as shown below: Partner Assets Liabilities Pateno P60,000 P80,000 Bautista 280,000 200,000 Apalisoc 250,000 240,000 Required: Determine the receipt of cash from Bautista and Apalisoc, the appropriate distribution of cash, and the completion of the partnership liquidation.arrow_forward
- Explain with solution Partners Biore and Selisana each have a P450,000 capital balance and share profits and losses in a 3-2 ratio, respectively. Cash equals P150,000, non-cash assets equal P1,500,000, and liabilities equal P750,000. If the non-cash assets are sold for P700,000 and both partners agree to make up for any capital deficits with personal cash contributions, upon liquidation Selisana will receive a cash distribution of a. P100,000. b. P50,000. CP130,000. d. P0arrow_forwardBefore liquidation, the following is the financial position of the partnership W, X, Y and Z: W, capital 275,000 W, loan 50,000 X, capital 225,000 Y, capital 257,500 Z, capital 342,500 P&L ratio is 4:3:2:1, respectively. 300,000 was received from certain assets are sold and are distributed to partners. What cash amount should Z receive? a. 300,000 b. 0 c. 135,834 d. 166,166arrow_forwardPartnership Liquidation PROBLEM 4: MULTIPLE CHOICE-COMPUTATIONAL 1. The following condensed balance sheet is presented for the partnership of Smith and Jones, who share profits and losses in the ratio of 60:40, respectively: Other assets Smith, loan (AICPA) Cash Other assets Total assets 450,000 20,000 The partners have decided to liquidate the partnership. If the other assets are sold for P385,000, what amount of the available cash should be distributed to Smith? a. 136,000 b. 156,000 470,000 a. 25,000 b. 24,000 Total Accounts payable Smith, capital Jones, capital 2. The statement of financial position of the partnership of A, B and C shows the following information: 22,400 212,000 234,400 151 c. 159,000 120,000 195,000 155,000 470,000 Liabilities A, capital (50%) - B, capital (25%) C, capital (25%) Total liabilities & equity d. 195,000 38,400 76,000 The partners realized P56,000 from the first installment sale of non-cash assets with total carrying amount of P120,000. How much did B…arrow_forward
- The partners of Grafton Company have decided to liquidate their business. Noncash assets were sold for $115,000. The income ratios of the partners Kale D., Croix D., and Marais K. are 2:3:3, respectively. Complete the following schedule of cash payments for Grafton Company. DO IT! 3a: Partnership Liquidation No Capital Deficiency (Solution) Gafton Company Schedule of Cash Payments \table [[Item, Cash,+, \table[[Noncash], [Assets]],, Liabilities,, \table [[arrow_forwardThe 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…arrow_forwardMultiple Choice Instruction: Encircle the letter of the corresponding correct answer. 1. The process of winding-up the business activity is converting non-cash assets into cash, paying its liabilities and distribution of cash and the remaining assets to individual partners- a) realization b) dissolution c) liquidation d) none of these 2. When the partnership's non-cash assets are realized at less than its book value during the liquidation process, it results to a - a) gain on realization b) loss on realization c)odeficiency transactions d) none of these 3. When a partner develops a debit balance in his capital, but such partner has a loan to the partnership, he may exercise the doctrine of-arrow_forward
- True or False 4/29/2022 Instruction: Write "T" if the statement is correct and "F" if incorrect. 1. Liquidation refers to payment of all partnership's obligations during the process of dissolution. 2. When non-cash assets are sold less than the book value, the sale results to a gain on realization. 3. During the liquidation process, the partnership will focus on terminal activities. 4. Example of terminal activities are the sale of non-cash assets, payment of partnership's creditors and distribution of excess cash to the partners. 5. Right of offset is an established legal doctrine that a deficient partner can exercise to partly or fully apply his loan account to the partnership against his capital deficiency in the process of liquidation. 6. The first step of the liquidation process is the sale of the non-cash assets and distribution of realization gain or loss. - 499arrow_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_forward1. Liabilities of P300,000 were settled in full for P224,000. The P76,000 difference would be reported on the statement of realization and liquidation as: [A] Liabilities not liquidated [B] Liabilities to be liquidated [C] Gain [D] Loss 2. Which of the following is incorrect on why a particular partner may have a deficit balance during a partnership liquidation? I. The partner with the deficit may have the greatest profit and loss residual ratio II. The partner with the deficit may have made the greatest withdrawals from the partnership III. The partner with the deficit may have the smallest profit and loss residual ratio {A}. I only {B}. II only {C}. III only {D}. I and II only 3. When making a distribution to partners during a partnership liquidation, the partner who should receive the last allocation of the distribution is the one who has which of the following? [A] The largest capital account balance [B] The largest loss absorption power [C] The smallest capital account…arrow_forward
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