Exam 15: Partnerships: Termination and Liquidation

The following account balances were available for the Perry, Quincy, and Renquist partnership just before it entered liquidation: Included in Perry's Capital account balance is a $20,000 partnership loan owed to Perry. Perry, Quincy, and Renquist shared profits and losses in a ratio of 2:4:4. Liquidation expenses were expected to be $15,000. All partners were insolvent.For what amount would noncash assets need to be sold to generate enough cash in order that at least one partner would receive some cash upon liquidation?

The Allen, Bevell, and Carter partnership began the process of liquidation with the following balance sheet: Allen, Bevell, and Carter share profits and losses in a ratio of 3:2:5. Liquidation expenses are expected to be $14,000.If the noncash assets were sold for $275,000, what amount of the loss would have been allocated to Bevell with respect to the noncash assets?

A local partnership was considering the possibility of liquidation. Capital account balances at that time were as follows. Profits and losses were divided on a 4:2:2:2 basis, respectively. At that time, the partnership held noncash assets reported at $360,000 and liabilities of $120,000. There was no cash on hand at the time.If the assets could be sold for $228,000 and there are no liquidation expenses, what is the amount that Tillman would receive from the liquidation?

The Keller, Long, and Mason partnership had the following balance sheet just before entering liquidation: Keller, Long, and Mason share profits and losses in a ratio of 2:4:4.Assume that noncash assets were sold for $60,000 and liquidation expenses in the amount of $18,500 were incurred. If Long was personally insolvent and could not contribute any assets to the partnership, and Keller and Mason were both solvent, what amount of cash would Keller receive from the distribution of partnership assets?

What events or circumstances might force the termination of a partnership and liquidation of its assets?

A local partnership has assets of cash of $5,000 and a building recorded at $80,000. All liabilities have been paid. The partners' capital accounts are as follows: Harry $40,000, Landers $30,000 and Waters $15,000. The partners share profits and losses 4:4:2.If the building is sold for $50,000 and there are no liquidation expenses what amount should Harry receive in the final settlement?

At the end of a partnership liquidation, how is any remaining cash distributed to the partners?

White, Sands, and Luke has the following capital account balances and profit and loss ratios:$60,000 (30%); $100,000 (20%); and $200,000 (50%).The partnership has received a predistribution plan.How would $200,000 be distributed?

A local partnership has assets of cash of $30,000 and land recorded at $700,000. All liabilities have been paid and the partners are all personally insolvent. The partners' capital accounts are as follows: Roberts, $500,000, Ferry, $300,000 and Mones, $30,000. The partners share profits and losses 5:3:2.If the land is sold for $450,000, what amount will Roberts receive in the final settlement?

As of January 1, 2021, the partnership of Carlin, Yearly, and Granite had the following account balances and percentages for the sharing of profits and losses: The partnership incurred losses in recent years and decided to liquidate. The liquidation expenses were expected to be $20,000.How much of the existing cash balance could be distributed safely to partners at this time?

A partnership had the following account balances: Cash, $91,000; Other Assets, $702,000; Liabilities, $338,000; Polk, Capital (50% of profits and losses), $221,000; Garfield, Capital (30%), $143,000; Arthur, Capital (20%), $91,000. The company liquidated and $10,400 became available to the partners.Required:Who would have received the $10,400?

The partners of Donald, Chief & Berry LLP decided to liquidate on August 1, 2021. The balance sheet of the partnership is as follows, with the profit and loss ratio of 25%, 45%, and 30%, respectively. The partners do not expect to incur further liquidation expenses. A portion of the Other Assets with a carrying amount of $200,000 were sold for $140,000, and all available cash was distributed.Prepare the journal entry for Donald, Chief & Berry LLP on August 1, 2021, to record payment of liabilities.

Hanson, James, and Smith, a partnership, is in the process of liquidating. The partners have the following capital account balances; $48,000, $48,000, and ($18,000) respectively. The partners share all profits and losses 16%, 48%, and 36%, respectively. Smith has indicated that the ($18,000) deficit will be covered with a forthcoming contribution. The remaining partners have requested an immediate distribution of $40,000 in cash that is available. How should this cash be distributed?

The partners of Donald, Chief & Berry LLP decided to liquidate on August 1, 2021. The balance sheet of the partnership is as follows, with the profit and loss ratio of 25%, 45%, and 30%, respectively. The partners do not expect to incur further liquidation expenses. A portion of the Other Assets with a carrying amount of $200,000 were sold for $140,000, and all available cash was distributed.Prepare the schedule to compute the cash payments to the partners.

Which of the following could result in the termination and liquidation of a partnership?1) Partners are incompatible and choose to cease operations.2) There are excessive losses that are expected to continue.3) Retirement of a partner.

A partnership held three assets: Cash, $13,000; Land, $45,000; and a Building, $65,000. There were no recorded liabilities. The partners anticipated that expenses required to liquidate their partnership would amount to $6,000. Capital account balances were as follows: The partners shared profits and losses 3:3:2:2, respectively.Required:Prepare a proposed schedule of liquidation, showing how cash could be safely distributed to the partners at this time.

The Allen, Bevell, and Carter partnership began the process of liquidation with the following balance sheet: Allen, Bevell, and Carter share profits and losses in a ratio of 3:2:5. Liquidation expenses are expected to be $14,000.Assuming that the noncash assets were sold for $150,000, which partner(s) would have been required to contribute assets to the partnership to cover a deficit in his or her capital account, prior to considering the liquidation expenses incurred?

Dancey, Reese, Newman, and Jahn were partners who shared profits and losses on a 4:2:2:2 basis, respectively. They were beginning to liquidate their business. At the start of the process, Capital account balances were as follows: Which one of the following statements is true for a predistribution plan?

Which item is not shown on the statement of partnership liquidation?

A local partnership was considering the possibility of liquidation. Capital account balances at that time were as follows. Profits and losses were divided on a 4:2:2:2 basis, respectively. At that time, the partnership held noncash assets reported at $360,000 and liabilities of $120,000. There was no cash on hand at the time.If the assets could be sold for $228,000 and there are no liquidation expenses, what is the amount that Laurel would receive from the liquidation?