Lump-sum liquidations: liquidation of partnership in which all assets are converted into cash within a short time, creditors are paid, and a single lump-sum payment is made to the partners for their capital interests. Partnership may experiences losses on disposal of assets, because it has to make offer below the normal selling price to encourage immediate sales. The partnership attempts to collect receivable has to offer large cash discounts for prompt payments. Any goodwill on the partnership books is generally written off when the partnership begins liquidation because it is no longer a going concern. In some situations a deficit may occur in a partner’s capital account if its credit balance is too low to absorb share of losses, such deficit may be cleared by either partner investing cash or other asset or the partner’s capital deficit is distributed to the other partners in their resulting loss sharing ratio. The amount of cash each partner will receive as liquidating distribution when equipment is sold for the amount stated in each of the following cases.

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Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

Chapter 16, Problem 16.3E

To determine

Lump-sum liquidations: liquidation of partnership in which all assets are converted into cash within a short time, creditors are paid, and a single lump-sum payment is made to the partners for their capital interests. Partnership may experiences losses on disposal of assets, because it has to make offer below the normal selling price to encourage immediate sales. The partnership attempts to collect receivable has to offer large cash discounts for prompt payments. Any goodwill on the partnership books is generally written off when the partnership begins liquidation because it is no longer a going concern.

In some situations a deficit may occur in a partner’s capital account if its credit balance is too low to absorb share of losses, such deficit may be cleared by either partner investing cash or other asset or the partner’s capital deficit is distributed to the other partners in their resulting loss sharing ratio.

The amount of cash each partner will receive as liquidating distribution when equipment is sold for the amount stated in each of the following cases.

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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…

The following balance sheet is for a local partnership in which the partners have become very unhappy with each other. To avoid more conflict, the partners have decided to cease operations and sell all assets. Using this information, answer the following questions. Each question should be viewed as an situation related to the partnership’s liquidation. The $10,000 cash that exceeds the partnership liabilities is to be disbursed immediately. If profits and losses are allocated to Adams, Baker, Carvil, and Dobbs on a 2:3:3:2 basis, respectively, how will the $10,000 be divided? The $10,000 cash that exceeds the partnership liabilities is to be disbursed immediately. If profits and losses are allocated on a 2:2:3:3 basis, respectively, how will the $10,000 be divided? The building is immediately sold for $70,000 to give total cash of $110,000. The liabilities are then paid, leaving a cash balance of $80,000. This cash is to be distributed to the partners. How much of this money will each…

Problem #1 (Adapted) Jack and Jill are partners who share profit or loss in the ratio of 3:2. They have capital balance of P200,000 and P300,000, respectively. Jill needed money and made known to Jack her intention to withdraw part of her capital in the partnership. However, much of the partnership funds are tied-up in accounts receivables and inventories and Jack suggested that she just sell the interest of her to Hill, a common friend. Hill agrees to purchase ½ of Jill's interest for P170,000. Required: A. Prepare journal entry in the books of partnership to record the admission of Hill. B. Determine the composition and total partnership capital after admission of Hill. c. Does it necessarily follow that Hill will have 20% share in the profit or loss (1/2 of the share of Jill)?

Answer 2

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Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

Chapter 16, Problem 16.3E

To determine

Lump-sum liquidations: liquidation of partnership in which all assets are converted into cash within a short time, creditors are paid, and a single lump-sum payment is made to the partners for their capital interests. Partnership may experiences losses on disposal of assets, because it has to make offer below the normal selling price to encourage immediate sales. The partnership attempts to collect receivable has to offer large cash discounts for prompt payments. Any goodwill on the partnership books is generally written off when the partnership begins liquidation because it is no longer a going concern.

In some situations a deficit may occur in a partner’s capital account if its credit balance is too low to absorb share of losses, such deficit may be cleared by either partner investing cash or other asset or the partner’s capital deficit is distributed to the other partners in their resulting loss sharing ratio.

The amount of cash each partner will receive as liquidating distribution when equipment is sold for the amount stated in each of the following cases.

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Answer 3

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Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

Chapter 16, Problem 16.3E

To determine

Lump-sum liquidations: liquidation of partnership in which all assets are converted into cash within a short time, creditors are paid, and a single lump-sum payment is made to the partners for their capital interests. Partnership may experiences losses on disposal of assets, because it has to make offer below the normal selling price to encourage immediate sales. The partnership attempts to collect receivable has to offer large cash discounts for prompt payments. Any goodwill on the partnership books is generally written off when the partnership begins liquidation because it is no longer a going concern.

In some situations a deficit may occur in a partner’s capital account if its credit balance is too low to absorb share of losses, such deficit may be cleared by either partner investing cash or other asset or the partner’s capital deficit is distributed to the other partners in their resulting loss sharing ratio.

The amount of cash each partner will receive as liquidating distribution when equipment is sold for the amount stated in each of the following cases.

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Answer 4

Question

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

Chapter 16, Problem 16.3E

To determine