Exam 10: Partnerships: Termination and Liquidation

Gonda, Herron, and Morse is considering possible liquidation because partner Morse is personally insolvent. The partners have the following capital balances: $60,000, $70,000, and $40,000, respectively, and share profits and losses 30%, 45%, and 25%, respectively. The partnership has $200,000 in noncash assets that can be sold for $150,000. The partnership has $10,000 cash on hand, and $40,000 in liabilities. What is the minimum that partner Morse's creditors would receive if they have filed a claim for $50,000?

A local partnership was considering the possibility of liquidation since one of the partners (Ding) was personally insolvent. Capital balances at that time were as follows. Profits and losses were divided on a 4:2:2:2 basis, respectively. Ding, capital \ 60,000 Laurel, capital 67,000 Ezzard, capital 17,000 Tillman, capital 96,000 Creditors of partner Ding filed a $25,000 claim against the partnership's assets. 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 what is the minimum amount that Tillman's creditors would have received?

The Arnold, Bates, Carlton, and Delbert partnership was liquidating. It had paid all its liabilities and had some assets yet to be sold. The partners had capital account balances of ($50,000), $90,000, $110,000, and $130,000. There was $40,000 cash available for distribution to the partners. What procedures would be followed to determine the amount of cash that could safely be distributed to each partner?

The Henry, Isaac, and Jacobs partnership was about to enter liquidation with the following account balances: Estimated expenses of liquidation were $5,000. Henry, Isaac, and Jacobs shared profits and losses in a ratio of 2:4:4. Before liquidating any assets, the partners determined the amount of cash for safe payments and distributed it. The noncash assets were then sold for $120,000. The liquidation expenses of $5,000 were paid. How would the $120,000 be distributed to the partners? (Hint: Either a predistribution plan or a schedule of safe payments would be appropriate for solving this item.)

The following account balances were available for the Perry, Quincy, and Renquist partnership just before it entered liquidation: Included in Perry's capital 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 solvent. What amount would noncash assets need to be sold for in order for any partner to receive some cash?

For a partnership, how should liquidation gains and losses be accounted for?

A local partnership was considering the possibility of liquidation since one of the partners (Ding) was personally insolvent. Capital balances at that time were as follows. Profits and losses were divided on a 4:2:2:2 basis, respectively. Ding, capital \ 60,000 Laurel, capital 67,000 Ezzard, capital 17,000 Tillman, capital 96,000 Creditors of partner Ding filed a $25,000 claim against the partnership's assets. 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, what is the minimum amount that Ding's creditors would have received?

The partners of Donald, Chief & Berry LLP decided to liquidate on August 1, 2013. The balance sheet of the partnership is as follows, with the profit and loss ratio of 25%, 45%, and 30%, respectively. The disposal of Other Assets with a carrying amount of $200,000 realized $140,000, and all available cash was distributed. Prepare the journal entry for Donald, Chief & Berry LLP on August 1, 2013, to record the offset of the loan receivable from Donald.

The partners of Donald, Chief & Berry LLP decided to liquidate on August 1, 2013. The balance sheet of the partnership is as follows, with the profit and loss ratio of 25%, 45%, and 30%, respectively. The disposal of Other Assets with a carrying amount of $200,000 realized $140,000, and all available cash was distributed. Prepare the schedule to compute the cash payments to the partners.

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, how much cash will Waters receive in the final settlement?

A local partnership was considering the possibility of liquidation since one of the partners (Ding) was personally insolvent. Capital balances at that time were as follows. Profits and losses were divided on a 4:2:2:2 basis, respectively. Ding, capital \ 60,000 Laurel, capital 67,000 Ezzard, capital 17,000 Tillman, capital 96,000 Creditors of partner Ding filed a $25,000 claim against the partnership's assets. 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, what is the minimum amount that Laurel's creditors would have received?

Xygote, Yen, and Zen were partners who were liquidating their partnership. Each partner has a deficit balance in their respective capital account. All assets from the partnership have been liquidated and all of the liabilities had been paid. How should any additional cash coming into the partnership be distributed to the partners?

The Henry, Isaac, and Jacobs partnership was about to enter liquidation with the following account balances: Estimated expenses of liquidation were $5,000. Henry, Isaac, and Jacobs shared profits and losses in a ratio of 2:4:4. What amount of cash was available for safe payments, based on the above information?

Which one of the following statements is correct?

The following account balances were available for the Perry, Quincy, and Renquist partnership just before it entered liquidation: Included in Perry's capital 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 solvent. What would be the minimum amount for which the noncash assets must have been sold, in order for Quincy to receive some cash from the liquidation?

Which of the following statements is true concerning the distribution of safe payments?

What is the preferred method of resolving a partner's deficit balance, according to the Uniform Partnership Act?

What is the purpose of a predistribution plan?

What is the role of the accountant during the liquidation process?

The balance sheet of Rogers, Dennis & Berry LLP prior to liquidation included the following: Cash \ 40,000 Noncash assets 80,000 Liabilities 20,000 Loan Payable to Rogers 10,000 Rogers, Capital 35,000 Dennis, Capital 30,000 Berry, Capital 25,000 The three partners shared net income and losses in a 5:3:2 ratio, respectively. Noncash assets were sold for $60,000. Creditors were paid in full, partners were paid $35,000, and the balance of cash was retained pending future developments. Record the journal entry for the sale of the noncash assets.