Connect Access Card for Advanced Financial Accounting
12th Edition
ISBN: 9781260165098
Author: Christensen, Theodore E., COTTRELL, David
Publisher: McGraw-Hill Education
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Chapter 16, Problem 16.6E
To determine
Installment liquidation: takes place for several months to complete, and periodic or installment payments are made to the partners during the liquidation period because they require funds for personal purposes. Most
Instalment liquidations involve a 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.
A safe payment schedule determines what amounts may be safely distributed to which partner without violating any of the principles of liquidation.
the statement of partnership realization and liquidation with a safe payment schedule for the two month liquidation period.
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A Statement of Financial Position for the partnership of John, Paul and Ryan, who share profits in
the ratio of 2:1:1, shows the following balances just before liquidation:
Assets
Cash
Other assets
Liabilities and Equity
Liabilities
240,000
P 144,000
714,000
John, capital
264,000
186,000
Paul, capital
Ryan, capital
168,000
In the first month of liquidation, certain assets are sold for P384,000. Liquidation expenses of
P12,000 are paid, and additional expenses are anticipated. Liabilities of P64,800 are paid and
sufficient cash is retained for the anticipated liquidation expenses. In the first payment to partners,
John receives P60,000.
How much is the theoretical losses in the first month of liquidation?
P
В.
Pisces, Leo and Gemini share profits in the ration of 5:3:2, respectively. Capital and loan balances
just prior to partnership liquidation are:
САРITAL
LOANS
Pisces
P 120,000
Pisces
P 45,000
Leo
90,000
Leo
30,000
Gemini
40,000
Gemini
13,000
Non-cash assets are sold, and cash is distributed to partners in monthly installments during the
course of liquidation as follows:
January – P 15,000; February - P 40,000; March - P 90,000; April – P 30,000 (final distribution)
Required:
a) Prepare a program to show how cash should be distributed during the entire course of
liquidation,
b) Using the program developed in (a), prepare schedules summarizing the payments to be
made to partners at the end of each month.
c) Prepare a statement of liquidation to summarize the course of liquidation.
March, April, and May have been in partnership for a number of years. The partners allocate all profits and losses on a 2:3:1 basis, respectively. Recently, each partner has become personally insolvent and, thus, the partners have decided to liquidate the business in hopes of remedying their personal financial problems. As of September 1, the partnership’s balance sheet is as follows:
Prepare journal entries for the following transactions:
Sold all inventory for $56,000 cash.
Paid $7,500 in liquidation expenses.
Paid $40,000 of the partnership’s liabilities.
Collected $45,000 of the accounts receivable.
Distributed safe cash balances; the partners anticipate no further liquidation expenses.
Sold remaining accounts receivable for 30 percent of face value.
Sold land, building, and equipment for $17,000.
Paid all remaining liabilities of the partnership.
Distributed cash held by the business to the partners.
Chapter 16 Solutions
Connect Access Card for Advanced Financial Accounting
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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