Exam 15: Partnerships: Termination and Liquidation

What is a marshaling of assets?

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,and the liquidation expenses of $5,000 were paid.How much of the $120,000 would be distributed to Henry?

If the noncash assets were sold for $105,000,what would have been the maximum amount of cash that Canton could have expected to receive?

The partnership of Nurr,Cleamons,and Kelly was insolvent,as was Cleamons personally.The partnership had begun liquidating its assets and Cleamons' capital account had a debit balance.How would the claim of Nurr and Kelly against Cleamons be ranked in comparison with the claims of Cleamons' other creditors?

Which of the following statements is false concerning the Schedule of Liquidation?

What is a safe cash payment?

Gonda,Herron,and Morse is considering possible liquidation because Morse is 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 assets that can be sold for $150,000.What is the minimum that Morse's creditors would receive if they have filed a claim for $50,000?

REFERENCE: Ref.15_04 The balance sheet of Rogers,Dennis & Berry LLP prior to liquidation included the following: 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.

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?

The Amos,Billings,and Cleaver partnership had two assets: (1)cash of $40,000 and (2)an investment with a book value of $110,000.The ratio for sharing profits and losses is 2:1:1.The balances in the capital accounts were: Amos,capital: $45,000 Billings,capital: $75,000 Cleaver,capital: $30,000 Required: If the investment was sold for $80,000,how much cash would each partner have received?

The Abrams,Bartle,and Creighton partnership began the process of liquidation with the following balance sheet: Abrams,Bartle,and Creighton share profits and losses in a ratio of 3:2:5.Liquidation expenses are expected to be $12,000. After the liquidation expenses of $12,000 had been paid and the noncash assets sold,Creighton had a deficit of $8,000.For what amount were the noncash assets sold?

.A local partnership was in the process of liquidating and reported the following capital balances: Douglass indicated that the $14,000 deficit would be covered by a forthcoming contribution.However,the two remaining partners asked to receive the $31,000 that was then available. How much of this money should Zobart receive?

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

The Keaton,Lewis,and Meador partnership had the following balance sheet just before entering liquidation: Keaton,Lewis,and Meador share profits and losses in a ratio of 2:4:4.Noncash assets were sold for $180,000.Liquidation expenses were $10,000. Assume that Keaton was personally insolvent with assets of $8,000 and liabilities of $60,000.Lewis and Meador were both solvent and able to cover deficits in their capital accounts,if any.What amount of cash could Keaton's personal creditors have expected to receive from partnership assets?

REFERENCE: Ref.15_05 The partners of Donald,Chief & Berry LLP decided to liquidate on August 1,2009.The balance sheet of the partnership is as follows,with the income-sharing ratio of 25%,45%,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 1,2009,to record the elimination of the loan receivable from Donald.

The Abrams,Bartle,and Creighton partnership began the process of liquidation with the following balance sheet: Abrams,Bartle,and Creighton share profits and losses in a ratio of 3:2:5.Liquidation expenses are expected to be $12,000. The noncash assets were sold for $134,000.Which partner(s)would have had to contribute assets to the partnership to cover a deficit in his or her capital account?

The Abrams,Bartle,and Creighton partnership began the process of liquidation with the following balance sheet: Abrams,Bartle,and Creighton share profits and losses in a ratio of 3:2:5.Liquidation expenses are expected to be $12,000. If the noncash assets were sold for $234,000,what amount of the loss would have been allocated to Bartle?

Matching (1. )The schedule of liquidation (2. )Deficit capital balances (3. )Marshaling of assets (4. )Predistribution plan (A. )A schedule of liquidation should be produced periodically by the accountant to disclose losses and gains that have been incurred,remaining assets and liabilities,and current capital balances. (B )At the start of a liquidation,this document provides guidance for all payments made to the partners throughout the liquidation (C. )One or more partners may have a negative capital balance often as a result of losses incurred in disposing of assets. (D. )Provides an equitable system for distributing assets during liquidation.

White,Sands,and Luke has the following capital balances and profit and loss ratios; $50,000 (30%),$100,000 (20%)and $200,000 (50%).If the partnership is to be liquidated and $150,000 becomes available for the partners immediately,who gets the money?

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