ADVANCED FINANCIAL ACCOUNTING IA
12th Edition
ISBN: 9781260545081
Author: Christensen
Publisher: MCG
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Chapter 16, Problem 16.2C
To determine
Concept introduction: Installment liquidation is carried out in several stages, and payments are made to the partners during the liquidation process periodically, to fulfill the needs of partners for personal purposes. In order to get a better price of assets to be sold installment liquidations take place over a stretched period. It involves the distribution of cash to partners before complete liquidation of assets occurs, they are two methods for ensuring fairness and equality in making cash distributions (1) safe payment schedule and (2) cash distribution plan.
Cash distribution analysis, and the advice to be given in the given case.
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After 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.
The balance sheet for the Delphine, Xavier, and Olivier partnership follows:
Delphine, Xavier, and Olivier share profits and losses in the ratio of 4:4:2, respectively. The partners have agreed to terminate the business and estimate that $12,000 in liquidation expenses will be incurred.
What is the amount of cash that safely can be paid to partners prior to liquidation of noncash assets?
How should the safe amount of cash determined in (a) be distributed to the partners?
Adams, Peters, and Blake share profits and losses for their APB Partnership in a ratio of 2:3:5. When they decide to liquidate, the
balance sheet is as follows:
Cash
Adams, Loan:
Other Assets
Assets
Total Assets
Liabilities
Adams, Capital
Peters, Capital
Blake, Capital
Total Liabilities and Equities
Liquidation expenses are expected to be negligible. No interest accrues on loans with partners after termination of the business.
Required:
Prepare a cash distribution plan for the APB Partnership. Please follow the practical guidelines when completing this worksheet.
Profit and loss percentages
Preliquidation capital balances
Loan to Adams
Total
Loss absorption potential
Decrease highest LAP to next highest
Adams
$ 51,000
12,200
222,000
$285,200
Decrease LAPs to next highest
Adams
Peters
✪
00
Adams
Loss Absorption Potential
Peters
335,500
(30.500)
$ 305,000
O (142,400)
O
$ 162.600
Answer is not complete.
APB PARTNERSHIP
Cash Distribution Plan
Liabilities and Capital
305,000
$ 305,000…
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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