Exam 15: Partnerships: Termination and Liquidation

REFERENCE: Ref.15_03 Hardin,Sutton,and Williams has operated a local business as a partnership for several years.All profits and losses have been allocated on a 3:2:1 ratio,respectively.Recently,Williams has undergone personal financial problems,and is insolvent.To satisfy Williams' creditors,the partnership has decided to liquidate. The following balance sheet has been produced: During the liquidation process,the following transactions take place: - Noncash assets are sold for $116,000. - Liquidation expenses of $12,000 are paid.No further expenses are expected. - Safe capital distributions are made to the partners. - Payment is made of all business liabilities. - Any deficit capital balances are deemed to be uncollectible. -Compute safe cash payments after the noncash assets have been sold and the liquidation expenses have been paid.

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 realization of the other assets.

The following account balances were available for the Perry,Quincy,and Renquist partnership just before it entered liquidation: Perry,Quincy,and Renquist had shared profits and losses in a ratio of 2:4:4.Liquidation expenses were expected to be $8,000. All partners were solvent.What would be the minimum amount for which the noncash assets must have been sold for,in order for Quincy to receive some cash from the liquidation?

What would be the maximum amount Garr might have had to contribute to the partnership to eliminate a deficit balance in his account?

The Arnold,Bates,Carlton,and Delbert partnership was liquidating.It had paid all of 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?

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 Justice receive?

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 payment of outstanding liabilities to the creditors.

REFERENCE: Ref.15_02 On January 1,2009,the partners of Won,Cadel,and Dax (who shared profits and losses in the ratio of 5:3:2,respectively)decided to liquidate their partnership.The trial balance at this date was as follows: The partners planned a program of piecemeal conversion of the business assets to minimize liquidation losses.All available cash,less an amount retained to provide for future expenses,was to be distributed to the partners at the end of each month.A summary of liquidation transactions follows: -Prepare a schedule to calculate the safe installment payments to be made to the partners at the end of March.

What should occur when a solvent partner has a deficit balance?

What term is used for the ranking of creditors' claims against an individual?

A local partnership was considering the possibility of liquidation since one of the partners (Ding)was insolvent.Capital balances at that time were as follows.Profits and losses were divided on a 4:2:2:2 basis,respectively. Ding's creditors filed a $25,000 claim against the partnership's assets.At that time,the partnership held assets reported at $360,000 and liabilities of $120,000. If the assets could be sold,for $228,000 what is the minimum amount that Tillman's creditors would have received?

Under the marshaling of assets doctrine,personal creditors can claim a partner's share of partnership assets under which condition?

A local partnership was considering the possibility of liquidation since one of the partners (Ding)was insolvent.Capital balances at that time were as follows.Profits and losses were divided on a 4:2:2:2 basis,respectively. Ding's creditors filed a $25,000 claim against the partnership's assets.At that time,the partnership held assets reported at $360,000 and liabilities of $120,000. If the assets could be sold for $228,000,what is the minimum amount that Ding's creditors would have received?