Exam 15: Partnerships: Termination and Liquidation

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. -Determine the cash to be retained and prepare a schedule to distribute $35,000 cash 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?

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.

Hardin, Sutton, and Williams has operated a local business as a partnership for several years. All profits and losses have been allocated in 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. -Jones, Marge, and Tate LLP decided to dissolve and liquidate the partnership on September 30, 2011. After realization of a portion of the noncash assets, the capital account balances were Jones $50,000; Marge $40,000; and Tate $15,000. Cash of $35,000 and other assets with a carrying amount of $100,000 were on hand. Creditors' claims totaled $30,000. Jones, Marge, and Tate shared net income and losses in a 2:1:1 ratio, respectively. Prepare a working paper to compute the amount of cash that may be paid to creditors and to partners at this time, assuming that no partner is solvent.

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

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 balances were as follows: Dancey, capital \ 72,000 Reese, capital 32,000 Newman, capital 52,000 Jahn, capital 24,000 Which one of the following statements is true for a predistribution plan?

The partnership of Rayne, Marin, and Fulton was being liquidated by the partners. Rayne was insolvent and did not have enough assets to pay all his personal creditors. Under what conditions might Rayne's personal creditors have claimed some of the partnership assets?

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 balances were as follows: King, Capital: $32,700 Murphy, Capital: 36,400 Madison, Capital: 26,000 Pond, Capital: 27,900 The partners shared profits and losses 30:30:20:20, respectively. Required: Prepare a proposed schedule of liquidation, showing how cash could be safely distributed to the partners at this time.

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

Xygote, Yen, and Zen were partners who were liquidating their partnership. Each partner was insolvent. All assets had been liquidated and all liabilities had been paid. How should any remaining cash have been distributed to the partners?

The Abrams, Bartle, and Creighton partnership began the process of liquidation with the following balance sheet: Cash \ 16,000 Liabilities \ 150,000 Noncash assets 434,000 Abrams, capital 80,000 Bartle, capital 90,000 Creighton, capital 130,000 Total Total \ 450,000 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?

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?

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 the partners? (Hint: Either a predistribution plan or a schedule of safe payments would be appropriate for solving this item) Henry Isaac Jacobs A) \ 33,000 \ 36,000 \ 51,000 B) \ 28,000 \ 36,000 \ 56,000 C) \ 29,333 \ 32,000 \ 58,667 D) \ 24,000 \ 48,000 \ 48,000 E) \ 38,000 \ 26,000 \ 56,000

The Abrams, Bartle, and Creighton partnership began the process of liquidation with the following balance sheet: Cash \ 16,000 Liabilities \ 150,000 Noncash assets 434,000 Abrams, capital 80,000 Bartle, capital 90,000 Creighton, capital 130,000 Total Total \ 450,000 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?

What is a safe cash payment?

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?

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.

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

Hardin, Sutton, and Williams has operated a local business as a partnership for several years. All profits and losses have been allocated in 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. -Prepare journal entries to record the actual liquidation transactions.

If the assets could be sold for $228,000, what is the minimum amount that Ezzard's creditors would have received?