Concept explainers
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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Chapter 16 Solutions
ADVANCED FINANCIAL ACCOUNTING IA
- The post closing account balances on December 31, 2011 for the partnership of EGD are as follows: Cash P 390,000 Inventory Accounts Payable E, Capital G, Capital D, Capital 160,000 50,000 150,000 80,000 270,000 Due to unsatisfactory results of operations, the partners decided to liquidate the business. During January, some of the inventory is sold for P100,000. On January 31, 2012 all available cash is distributed. It is doubtful if the remaining inventory items can be sold. How much should each partner receive as settlement?arrow_forwardA balance sheet for the partnership of A, B, and C, who share profits 2:1:1, shows the following balances just before liquidation: Cash: 48,000 Other Assets: 238,000 Liabilities: 80,000 B, Capital: 62,000 C, Capital: 56,000 On the first month of liquidation, certain non-cash assets were sold resulting to a loss of 23,000. Liquidation expenses of 4,000 were paid, and additionsl liquidation expenses of 3,200 were withheld to anticipate payment before liquidation is completed. After creditors were paid, partner B received 13,000 on the initial installment. Determine the total book value of the non-cash assets on the first month.arrow_forwardOn January 1, the partners of Van, Bakel, and Cox (who share profits and losses in the ratio of 5:3:2, respectively) decide to terminate operations and liquidate their partnership. The trial balance at this date follows: Cash Accounts receivable Inventory Machinery and equipment, net Van, loan Accounts payable Bakel, loan Van, capital Bakel, capital Cox, capital Totals February $ March Debit 36,000 102,000 88,000 225,000 66,000 $ Credit 95,000 56,000 The partners plan a program of piecemeal conversion of the partnership's assets to minimize liquidation losses. All available cash, less an amount retained to provide for future expenses, is to be distributed to the partners at the end of each month. A summary of the liquidation transactions follows: January 166,000 108,000 92,000 $ 517,000 $ 517,000 Collected $69,000 of the accounts receivable; the balance is deemed uncollectible. Received $56,000 for the entire inventory. Paid $4,000 in liquidation expenses. Paid $90,000 to the outside…arrow_forward
- On January 1, the partners of Mori, Lux, and Khan (who share profits and losses in the ratio of 5:3:2, respectively) decide to terminate operations and liquidate their partnership. The trial balance at this date follows: General Journal Cash Accounts receivable Inventory Machinery and equipment, net Mori, loan Accounts payable Lux, loan Mori, capital Lux, capital Khan, capital Totals Debit $ 32,000 94,000 80.0001 239,000 Credit 58.000 $ 89,000 48,000 152,000 104,000 88,000 $ 481,000 $ 481,000 The partners plan a program of piecemeal conversion of the partnership's assets to minimize liquidation losses. All available cash, less an amount retained to provide for future expenses, is to be distributed to the partners at the end of each month. A summary of the liquidation transactions follows: January February March Collected $65,000 of the accounts receivable; the balance is deemed uncollectible. Received $52,000 for the entire inventory. Paid $8,000 in liquidation expenses. Paid $72,000…arrow_forwardOn January 1, the partners of Van, Bakel, and Cox (who share profits and losses in the ratio of 5:3:2, respectively) decide to terminate operations and liquidate their partnership. The trial balance at this date follows: Cash Accounts receivable Inventory Machinery and equipment, net Van, loan Accounts payable Bakel, loan Van, capital Bakel, capital Cox, capital Totals Debit $ 32,000 94,000 Credit 80,000 217,000 58,000 $ 89,000 48,000 152,000 104,000 88,000 $ 481,000 $ 481,000 The partners plan a program of piecemeal conversion of the partnership's assets to minimize liquidation losses. All available cash, less an amount retained to provide for future expenses, is to be distributed to the partners at the end of each month. A summary of the liquidation transactions follows: January February March Collected $65,000 of the accounts receivable; the balance is deemed uncollectible. Received $52,000 for the entire inventory. Paid $8,000 in liquidation expenses. Paid $80,000 to the outside…arrow_forwardOn January 1, the partners of Van, Bakel, and Cox (who share profits and losses in the ratio of 5:3:2, respectively) decide to terminate operations and liquidate their partnership. The trial balance at this date follows: Cash Accounts receivable Inventory Machinery and equipment, net Van, loan Accounts payable Bakel, loan Van, capital Bakel, capital Cox, capital Totals Debit $ 32,000 94,000 Credit 80,000 217,000 58,000 $ 89,000 48,000 152,000 104,000 88,000 $ 481,000 $ 481,000 The partners plan a program of piecemeal conversion of the partnership's assets to minimize liquidation losses. All available cash, less an amount retained to provide for future expenses, is to be distributed to the partners at the end of each month. A summary of the liquidation transactions follows: January February March Collected $65,000 of the accounts receivable; the balance is deemed uncollectible. Received $52,000 for the entire inventory. Paid $8,000 in liquidation expenses. Paid $80,000 to the outside…arrow_forward
- On January 1, the partners of Mori, Lux, and Khan (who share profits and losses in the ratio of 5:3:2, respectively) decide to terminate operations and liquidate their partnership. The trial balance at this date follows: General Journal Cash Accounts receivable Inventory Machinery and equipment, net Mori, loan Accounts payable Lux, loan Mori, capital Lux, capital Khan, capital Totals Debit $32,000 94,000 80.0001 239,000 58.000 Credit $ 89,000 48,000 152,000 104,000 88,000 $481,000 $ 481,000 The partners plan a program of piecemeal conversion of the partnership's assets to minimize liquidation losses. All available cash, less an amount retained to provide for future expenses, is to be distributed to the partners at the end of each month. A summary of the liquidation transactions follows: January February March Collected $65,000 of the accounts receivable; the balance is deemed uncollectible. Received $52,000 for the entire inventory. Paid $8,000 in liquidation expenses. Paid $72,000 to…arrow_forwardOn January 1, the partners of Van, Bakel, and Cox (who share profits and losses in the ratio of 5:3:2, respectively) decide to terminate operations and liquidate their partnership. The trial balance at this date follows: Debit Credit Cash $ 24,000 Accounts receivable 78,000 Inventory 64,000 Machinery and equipment, net 201,000 Van, loan 42,000 Accounts payable $ 77,000 Bakel, loan 32,000 Van, capital 124,000 Bakel, capital 96,000 Cox, capital 80,000 Totals $ 409,000 $ 409,000 The partners plan a program of piecemeal conversion of the partnership’s assets to minimize liquidation losses. All available cash, less an amount retained to provide for future expenses, is to be distributed to the partners at the end of each month. A summary of the liquidation transactions follows: January Collected $57,000 of the accounts receivable; the balance is deemed uncollectible. Received $44,000 for…arrow_forwardPartners Mickey, Minnie, Donald and Daisy share profits in the ratio of 3:3:11 respectively. A balance sheet prepared just beforethe liquidation shows: Mickey Minnie Donald Daisy Capital balances Loanbalances P70,000 70,000 30,000 20,000 20,000 5,000 25,000 15,000 Proceeds fromthe sale of partnership assets during January and February are as follows: January February Proceeds fromsale of assets Cash distributed to partners Cashretained P15,000 10,000 P40,000 35,000 25,000 40,000 In January, how much cash were distributed to the partners respectively? Using the previous information, how much cash were distributed to the partners respectively in the month of February?arrow_forward
- Cue and Peed entered into a partnership on March 1, 200A. They agreed that Cue, the managing partner was to receive a salary allowance of P 24,000 per year and a bonus of 10% of the net profit after the salary allowance but before the bonus. The balance is to b e distributed in the ratio of their initial capital. Selected ledger accounts on December 31, 200A prior to adjustments showed the following balances: 3.14 Sales P 300,000 3,000 180,000 48,000 200,000 20,000 100,000 10,000 Sales Returns Purchases Operating Expenses Cue Capital Cue Drawing Peed Capital Peed Drawing Inventories at year-end were as follows: Office supplies, P 810 and merchandise, P 50,000. Prepaid insurance of P 1,200 and accrued expenses of P 400 are to be recognized. Depreciation of P 4,000 is to be provided. REQUIRED: Prepare the Statement of Partners' Equity for the 10- month period ended December 31, 200A.arrow_forwardOn January 1, the partners of Van, Bakel, and Cox (who share profits and losses in the ratio of 5:3:2, respectively) decide to terminate operations and liquidate their partnership. The trial balance at this date follows: Debit Credit Cash $ 24,000 Accounts receivable 78,000 Inventory 64,000 Machinery and equipment, net 201,000 Van, loan 42,000 Accounts payable $ 77,000 Bakel, loan 32,000 Van, capital 124,000 Bakel, capital 96,000 Cox, capital 80,000 Totals $ 409,000 $ 409,000 The partners plan a program of piecemeal conversion of the partnership’s assets to minimize liquidation losses. All available cash, less an amount retained to provide for future expenses, is to be distributed to the partners at the end of each month. A summary of the liquidation transactions follows: January Collected $57,000 of the accounts receivable; the balance is deemed uncollectible. Received $44,000 for…arrow_forwardA balance sheet for the QRS Partnership, which shares profits and losses in the ratio of 5:3:2 shows the following balances just before liquidation: Cash, 30,000; Other assets, 148,750; Liabilities, 50,000; Q, Capital, 55,000; R, Capital, 38,750; S Capital, 35,000. On the first month of liquidation, certain assets are sold for 80,000. Liquidation expenses of 2,500 is paid, and additional expenses are anticipated. Liabilities are paid amounting to 13,500, and sufficient cash is retained to ensure payment to creditors before making payment to partners. On the payments to partners, Q receives 15,625. Calculate the amount of cash withheld for anticipated liquidation expenses.arrow_forward
- College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage
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