Deck 15: Partnerships: Termination and Liquidation

Question 1

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, after the payment of liquidation expenses in the amount of $14,000 was made and the noncash assets were sold, if Carter has a deficit of $10,000, for what amount would the noncash assets have been sold?

A) $174,000.
B) $188,000.
C) $160,000.
D) $146,000.
E) $185,000.

Answer 1

A

Question 2

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?

A) $36,000.
B) $0.
C) $2,500.
D) $38,250.
E) $67,250.

Answer 2

E

Question 3

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?

A) $30,000.
B) $85,000.
C) $25,000.
D) $35,000.
E) $40,000.

Answer 3

C

Question 4

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?

A) The first available $16,000 would go to Newman.
B) The first available $20,000 would go to Dancey.
C) The first available $8,000 would go to Jahn.
D) The first available $8,000 would go to Newman.
E) The first available $4,000 would go to Jahn.

Question 5

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?

A) The first available $16,000 would go to Newman. The next $12,000 would go $8,000 to Dancey and $4,000 to Newman. The following $32,000 would be shared equally between Dancey, Reese, and Newman. A total distribution of $60,000 would be required before all four partners share any further payments equally.
B) The first available $16,000 would go to Newman. The next $12,000 would go $8,000 to Dancey and $4,000 to Newman. The following $32,000 would be shared by Dancey, Reese, and Newman. The total distribution would be $60,000 before all four partners share any further payments in their profit and loss sharing ratios.
C) The first $20,000 would go to Newman. The next $8,000 would go to Dancey. The next $12,000 would be shared equally by Dancey, Reese, and Newman. The total distribution would be $40,000 before all four partners share any further payments equally.
D) The first available $8,000 would go to Newman. The next $4,000 would be split equally between Dancey and Newman. The following $12,000 would be shared by Dancey, Reese, and Newman. The total distribution would be $24,000 before all four partners share any further payments equally.
E) The first available $8,000 would go to Newman. The next $4,000 would be split equally between Dancey and Newman. The following $12,000 would be shared by Dancey, Reese, and Newman. The total distribution would be $24,000 before all four partners share any further payments in their profit and loss sharing ratios.

Question 6

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?

A) Any amount in excess of $185,000.
B) Any amount in excess of $170,000.
C) Any amount in excess of $165,000.
D) Any amount in excess of $95,000.
E) Any amount in excess of $90,000.

Question 7

A local partnership was in the process of liquidating and reported the following Capital account 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 in the cash account.How much of this money should Zobart receive?

A) $15,467.
B) $14,467.
C) $17,333.
D) $15,633.
E) $15,867.

Question 8

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 the noncash assets need to be sold in order for Quincy to receive some cash from the liquidation?

A) Any amount in excess of $170,000.
B) Any amount in excess of $190,000.
C) Any amount in excess of $260,000.
D) Any amount in excess of $280,000.
E) Any amount in excess of $300,000.

Question 9

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) 1 only.
B) 1 and 2 only.
C) 2 and 3 only.
D) 3 only.
E) 1, 2, and 3.

Question 10

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?

A) Allen.
B) Bevell.
C) Carter.
D) Allen and Carter.
E) Allen and Bevell.

Question 11

A local partnership was in the process of liquidating and reported the following Capital account 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 in the cash account.How much of the $31,000 in the cash account should Justice receive?

A) $15,467.
B) $15,533.
C) $17,333.
D) $16,533.
E) $15,867.

Question 12

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?

A) $0.
B) $60,500.
C) $62,300.
D) $58,700.
E) $64,100.

Question 13

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 Ding would receive from the liquidation?

A) $36,000.
B) $0.
C) $2,500.
D) $38,720.
E) $67,250.

Question 14

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 available for safe payments. How should the amount of safe cash payments be distributed?

A) In a ratio of 2:4:4 among all the partners.
B) $18,333 to Henry and $16,667 to Jacobs.
C) In a ratio of 1:2 between Henry and Jacobs.
D) $15,000 to Henry and $10,000 to Jacobs.
E) $21,667 to Henry and $3,333 to Jacobs.

Question 15

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?

A) $36,000.
B) $0.
C) $2,500.
D) $38,250.
E) $67,250.

Question 16

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) $55,000.
B) $50,000.
C) $45,000.
D) $46,800.
E) $42,400.

Question 17

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.Assuming noncash assets were sold for $70,000 and liquidation expenses in the amount of $18,500 were incurred, how much will each partner receive in the liquidation?

A) Option A.
B) Option B.
C) Option C.
D) Option D.
E) Option E.

Question 18

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 prior to the sale of noncash assets. How would the $120,000 be distributed to the partners? (Hint: Either a predistribution plan or a statement of liquidation would be appropriate for solving this item.)

A) Option A.
B) Option B.
C) Option C.
D) Option D.
E) Option E.

Question 19

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 minimum amount that Ezzard would receive from the liquidation?

A) $36,000.
B) $0.
C) $2,500.
D) $38,250.
E) $67,250.

Question 20

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.The partnership feels confident it will be able to eventually sell the noncash assets and wants to distribute some cash before paying liabilities. Assuming there will be no liquidation expenses, how much would each partner receive of a total $70,000 distribution of cash?

A) Option A.
B) Option B.
C) Option C.
D) Option D.
E) Option E.

Question 21

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

A) Based on the individual partners' final capital balances.
B) Based on their share of profits and losses.
C) Equally.
D) Based on the length of time the partner was with the partnership.
E) Based on the initial investment made by each partner.

Question 22

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) Option A.
B) Option B.
C) Option C.
D) Option D.
E) Option E.

Question 23

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 $90,000 be distributed?

A) Option A.
B) Option B.
C) Option C.
D) Option D.
E) Option E.

Question 24

What accounting transactions are not recorded by an accountant during partnership liquidation?

A) The conversion of partnership assets into cash.
B) The allocation of gains and losses from sales of assets.
C) The payment of liabilities and expenses.
D) The initiation of legal action by creditors of the partnership.
E) Write-off of remaining unpaid debts.

Question 25

A partnership has assets of cash of $10,000 and equipment with a book value of $160,000. All liabilities have been paid. The partners' capital accounts are as follows Michael $80,000, Gregory $60,000 and Phillips $30,000. The partners share profits and losses on a 4:3:3 basis. If the equipment is sold for $100,000 and there are no liquidation expenses what amount should Phillips receive in the final settlement?

A) $6,000.
B) $12,000.
C) $20,000.
D) $36,000.
E) $42,000.
SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.
42) The Albert, Boynton, and Creamer partnership was in the process of liquidating its assets and going out of business. Albert, Boynton, and Creamer had capital account balances of $80,000, $120,000, and $200,000, respectively, and shared profits and losses in the ratio of 1:3:2. Equipment that had cost $90,000 and had a book value of $60,000 was sold for $24,000 cash.Required:Prepare the appropriate journal entry to record the sale of the equipment, distributing any gain or loss directly to the partners.

Question 26

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, what amount should Waters receive in the final settlement?

A) $5,000.
B) $9,000.
C) $18,000.
D) $28,000.
E) $55,000.

Question 27

A proposed schedule of liquidation is developed

A) based on the underlying assumption that all future events will result in total gains.
B) based on the underlying assumption that all partners will remain solvent throughout liquidation.
C) on the first day of each month as required by the Uniform Partnership Act.
D) based on the underlying assumption that all future events will result in total losses.
E) on a weekly basis as required by the Uniform Partnership Act.

Question 28

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

A) Current cash balances.
B) Property owned by the partnership.
C) Liabilities still to be paid.
D) Personal assets of the partners.
E) Current capital account balances of the partners.

Question 29

Which one of the following statements is correct?

A) If a partner of a liquidating partnership is unable to pay a capital account deficit, the deficit is absorbed by the other partners in the profit and loss ratio of those partners.
B) Gains and losses from the sale of noncash assets are divided in the ratio of the partners' capital account balances absent an alternate income-sharing plan stated in the partnership agreement.
C) A loan receivable from a partner is added to the partner's capital account balance in the preparation of a cash distribution plan.
D) Partners may not receive any cash before partnership creditors receive cash when liquidating a partnership.
E) All cash payments to partners are made using their profit and loss ratio when liquidating the partnership.

Question 30

A partnership has assets of cash of $10,000 and equipment with a book value of $160,000. All liabilities have been paid. The partners' capital accounts are as follows Michael $80,000, Gregory $60,000 and Phillips $30,000. The partners share profits and losses on a 4:3:3 basis. If the equipment is sold for $100,000 and there are no liquidation expenses what amount should Michael receive in the final settlement?

A) $10,000.
B) $18,000.
C) $20,000.
D) $56,000.
E) $62,000.

Question 31

The partnership of Gordon, Handel, and Mitchell is considering possible liquidation because partner Mitchell is personally insolvent. The partners have the following capital account balances: $120,000, $140,000, and $80,000, respectively, and share profits and losses 35%, 45%, and 20%, respectively. The partnership has $400,000 in noncash assets that can be sold for $300,000. The partnership has $20,000 cash on hand, and $80,000 in liabilities. What is the minimum that partner Mitchell's creditors would receive if they have filed a claim for $100,000?

A) $0.
B) $20,000.
C) $60,000.
D) $80,000.
E) $100,000.

Question 32

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?

A) $0.
B) $30,000.
C) $217,500.
D) $362,500.
E) $502,500.

Question 33

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

A) $0.
B) $15,000.
C) $300,000.
D) $217,500.
E) $362,500.

Question 34

During a partnership liquidation, how are gains and losses recorded?

A) Accrued in Other Comprehensive Income.
B) Accrued in a Liquidation Gain/Loss account.
C) Directly to Retained Earnings.
D) Directly to the partners' capital accounts, allocated equally.
E) Directly to the partners' capital accounts, allocated on the partners' profit and loss ratio.

Question 35

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?

A) Hanson $10,000; James $30,000.
B) Hanson $34,000; James $6,000.
C) Hanson $22,308; James $17,692.
D) Hanson $28,594; James $11,406.
E) Hanson $25,000; James $15,000.

Question 36

Which of the following is false a regarding a partner's deficit balance?

A) A partner cannot refuse to make contributions to cover their deficit balance.
B) Deficits can occur when the partnership has incurred significant operating losses.
C) Deficits can occur when the sale of noncash assets during the liquidation process results in material losses.
D) The partner with a deficit balance should contribute assets to cover the deficit balance.
E) The other partners may have to absorb the deficit balance.

Question 37

Which of the following statements is false concerning the partnership Statement of Liquidation?

A) Liquidations may take a considerable length of time to complete.
B) Frequent reporting by the accountant is rarely necessary.
C) The Statement of Liquidation provides a listing of transactions to date, current cash, and capital account balances.
D) The Statement of Liquidation provides a listing of property still held by the partnership as well as liabilities remaining unpaid.
E) The Statement of Liquidation keeps creditors and partners apprised of the results of the process of dissolution.

Question 38

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

A) The distribution of safe payments assumes that any capital deficit balances will prove to be a total loss to the partnership.
B) Safe payments are equal to the recorded capital account balances of those partners with capital account balances in excess of $0.
C) The distribution of safe payments may only be made after all liabilities have been paid.
D) In computing safe payments, partners with positive capital account balances are assumed to absorb an equal share of any deficit balance(s).
E) There are no safe payments until the liquidation is complete.

Question 39

A partnership has assets of cash of $10,000 and equipment with a book value of $160,000. All liabilities have been paid. The partners' capital accounts are as follows Michael $80,000, Gregory $60,000 and Phillips $30,000. The partners share profits and losses on a 4:3:3 basis. If the equipment is sold for $100,000 and there are no liquidation expenses what amount should Gregory receive in the final settlement?

A) $10,000.
B) $18,000.
C) $20,000.
D) $36,000.
E) $42,000.

Question 40

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?

A) $5,000.
B) $9,000.
C) $18,000.
D) $28,000.
E) $55,000.

Question 41

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?

Question 42

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?

Question 43

On January 1, 2021, 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 an installment program to dispose of the business assets and 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 February.

Question 44

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

Question 45

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: Required:If the investment was sold for $80,000, how much cash would each partner receive upon liquidation?

Question 46

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.

Question 47

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.

Question 48

Jones, Marge, and Tate LLP decided to dissolve and liquidate the partnership on September 30, 2021. 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.

Question 49

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.If the noncash assets are sold for $210,000, what would be the maximum amount of cash that Carlin could expect to receive?

Question 50

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 cash distribution to the partners.

Question 51

Hardin, Sutton, and Williams have 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 account balances are deemed to be uncollectible.Prepare journal entries to record the actual liquidation transactions.

Question 52

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.

Question 53

On January 1, 2021, 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 an installment program to dispose of the business assets and 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 payments to be made to the partners at the end of March.

Question 54

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.

Question 55

On January 1, 2021, 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 an installment program to dispose of the business assets and 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 payments to be made to the partners at the end of January.

Question 56

Hardin, Sutton, and Williams have 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 account balances are deemed to be uncollectible.Develop a predistribution plan for this partnership, assuming $12,000 of liquidation expenses are expected to be paid.

Question 57

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 recognize proceeds from the sale of Other Assets.

Question 58

Hardin, Sutton, and Williams have 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 account balances are deemed to be uncollectible.Compute safe cash payments after the noncash assets have been sold and the liquidation expenses have been paid.

Question 59

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 cash should each partner receive at this time, pursuant to a proposed schedule of liquidation?

Question 60

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

Question 61

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

Question 62

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 a claim to some of the partnership assets?

Question 63

Describe the content of a journal entry to record a gain or loss resulting from the liquidation of a partnership asset for cash.

Question 64

Why is a preliminary distribution of partnership assets prepared?

Question 65

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

Question 66

What is the purpose of a predistribution plan?

Question 67

What financial report would be prepared for a partnership that has begun liquidation but has not yet completed the process? What is the purpose of this report?

Question 68

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.

Question 69

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 the offset of the loan receivable from Donald.

Question 70

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

Question 71

What is a safe cash payment?