Deck 10: Partnerships: Termination and Liquidation

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Question
The following account balances were available for the Perry, Quincy, and Renquist partnership just before it entered liquidation:  Cash $90,000 Liabilities $170,000 Noncash assets 300,000 Perry, capital 70,000 Quincy, capital 50,000 Renquist, capital 100,000 Total $390,000‾ Total $390,000\begin{array} { l r l r } \text { Cash } & \$ 90,000 & \text { Liabilities } & \$ 170,000 \\\text { Noncash assets } & 300,000 & \text { Perry, capital } & 70,000 \\& & \text { Quincy, capital } & 50,000 \\& & \text { Renquist, capital } & 100,000 \\\text { Total } & \underline { \$ 390,000 } & \text { Total } & \$ 390,000 \\\end{array} Inlcuded 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?

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.
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Question
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\begin{array} { l r } \text { Ding, capital } & \$ 60,000 \\\text { Laurel, capital } & 67,000 \\\text { Ezzard, capital } & 17,000 \\\text { Tillman, capital } & 96,000\end{array} 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?

A)$36,000.
B)$0.
C)$2,500.
D)$38,720.
E)$67,250.
Question
The Henry, Isaac, and Jacobs partnership was about to enter liquidation with the following account balances:  Cash $90,000 Liabilities $60,000 Noncash assets 300,000 Henry, capital 80,000 Isaac, capital 110,000 Jacobs, capital 140,000 Total $390,000 Total $390,000\begin{array}{lrlrl}\text { Cash } & \$ 90,000 & \text { Liabilities } & \$ 60,000 \\\text { Noncash assets } & 300,000 & \text { Henry, capital } & 80,000\\&&\text { Isaac, capital } & 110,000 \\&&\text { Jacobs, capital } & 140,000 \\\text { Total } & \$ 390,000&\text { Total } & \$ 390,000\end{array} 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.
Question
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\begin{array} { l r } \text { Dancey, capital } & \$ 72,000 \\\text { Reese, capital } & 32,000 \\\text { Newman, capital } & 52,000 \\\text { Jahn, capital } & 24,000\end{array} 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 by Dancey,Reese,and Newman.The total distribution would be $60,000 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 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
A local partnership was in the process of liquidating and reported the following capital balances:  Justice, capital (40% share of all profits and losses )$23,000 Zobart, capital (35%)22,000 Douglass, capital (25%)(14,000)\begin{array}{lc}\text { Justice, capital }(40 \% \text { share of all profits and losses }) & \$ 23,000 \\\text { Zobart, capital }(35 \%) & 22,000 \\\text { Douglass, capital }(25 \%) & (14,000)\end{array} 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 Justice receive?

A)$15,467.
B)$15,533.
C)$17,333.
D)$16,533.
E)$15,867.
Question
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\begin{array} { l r } \text { Ding, capital } & \$ 60,000 \\\text { Laurel, capital } & 67,000 \\\text { Ezzard, capital } & 17,000 \\\text { Tillman, capital } & 96,000\end{array} 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?

A)$36,000.
B)$0.
C)$2,500.
D)$38,250.
E)$67,250.
Question
When a partnership is insolvent and a partner has a deficit capital balance,that partner is legally required to:

A)declare personal bankruptcy.
B)initiate legal proceedings against the partnership.
C)contribute cash to the partnership.
D)deliver a note payable to the partnership with specific payment terms.
E)None of the above.The partner has no legal responsibility to cover the capital deficit balance.
Question
The Keaton,Lewis,and Meador partnership had the following balance sheet just before entering liquidation:  Cash $100,000 Liabilities $40,000 Noncash assets 210,000‾ Keaton, Capital 90,000 Lewis, Capital 60,000 Meador, Capital 120,000‾ Total $310,000‾ Total $310,000‾\begin{array} { | l | r | l | l | r | } \hline \text { Cash } & \$ 100,000 & & \text { Liabilities } & \$ 40,000 \\\hline \text { Noncash assets } & \underline { 210,000 } & & \text { Keaton, Capital } & 90,000 \\\hline & & & \text { Lewis, Capital } & 60,000 \\\hline & & & \text { Meador, Capital } & \underline { 120,000 } \\\hline \text { Total } & \$ \underline { 310,000 } & & \text { Total } & \$ \underline { 310,000 } \\\hline\end{array} Keaton,Lewis,and Meador share profits and losses in a ratio of 2:4:4.Noncash assets were sold for $60,000.How much will each partner receive in the liquidation?  Keaton  Lewis  Meador  A) $40,000$26,667$53,333 B) $24,000$48,000$48,000 C) $60,000$0$60,000 D) $0$0$120,000 E) $36,000$12,000$72,000\begin{array} { | l | c | r |r | } \hline & \text { Keaton } & { \text { Lewis } } & { \text { Meador } } \\\hline \text { A) } & \$ 40,000 & \$26,667 & \$ 53,333 \\\hline \text { B) } & \$ 24,000 & \$ 48,000 & \$ 48,000 \\\hline \text { C) } & \$ 60,000 & \$ 0 & \$60,000 \\\hline \text { D) } & \$ 0 & \$ 0 & \$ 120,000\\\hline \text { E) } & \$ 36,000 & \$12,000 & \$72,000 \\\hline\end{array}

A)Option A
B)Option B
C)Option C
D)Option D
E)Option E
Question
The Keaton,Lewis,and Meador partnership had the following balance sheet just before entering liquidation:  Cash $100,000 Liabilities $40,000 Noncash assets 210,000‾ Keaton, Capital 90,000 Lewis, Capital 60,000 Meador, Capital 120,000‾ Total $310,000‾ Total $310,000‾\begin{array}{|l|r|l|l|r|}\hline \text { Cash } & \$ 100,000 & & \text { Liabilities } & \$ 40,000 \\\hline \text { Noncash assets } & \underline{210,000} & & \text { Keaton, Capital } & 90,000 \\\hline & & & \text { Lewis, Capital } & 60,000 \\\hline & & & \text { Meador, Capital } & \underline{120,000} \\\hline \text { Total } & \$ \underline{310,000} & & \text { Total } & \$ \underline{310,000} \\\hline\end{array} Keaton,Lewis,and Meador 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.How much would each partner receive of a total $60,000 distribution of cash?  Keaton  Lewis  Meador  A) $40,000$0$20,000 B) $12,000$24,000$24,000 C) $20,000$13,333$26,667 D) $60,000$0$0 E) $10,000$0$50,000\begin{array} { | l | c | r |r | } \hline & \text { Keaton } & { \text { Lewis } } & { \text { Meador } } \\\hline \text { A) } & \$ 40,000 & \$0 & \$ 20,000 \\\hline \text { B) } & \$ 12,000 & \$ 24,000 & \$ 24,000 \\\hline \text { C) } & \$ 20,000 & \$ 13,333 & \$ 26,667 \\\hline \text { D) } & \$ 60,000 & \$ 0 & \$ 0\\\hline \text { E) } & \$ 10,000 & \$ 0 & \$ 50,000 \\\hline\end{array}

A)Option A
B)Option B
C)Option C
D)Option D
E)Option E
Question
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 $450,000 Total $450,000\begin{array}{lrlr}\text { Cash } & \$ 16,000 & \text { Liabilities } & \$ 150,000 \\\text { Noncash assets } & 434,000 & \text { Abrams, capital } & 80,000\\&&\text { Bartle, capital } & 90,000 \\&&\text { Creighton, capital } & 130,000 \\\text { Total }&\$450,000&\text { Total } & \$ 450,000\end{array} 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 were paid and the noncash assets sold,Creighton had a deficit of $8,000.For what amount were the noncash assets sold?

A)$170,000.
B)$264,000.
C)$158,000.
D)$146,000.
E)$185,000.
Question
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\begin{array} { l r } \text { Dancey, capital } & \$ 72,000 \\\text { Reese, capital } & 32,000 \\\text { Newman, capital } & 52,000 \\\text { Jahn, capital } & 24,000\end{array} 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
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\begin{array} { l r } \text { Ding, capital } & \$ 60,000 \\\text { Laurel, capital } & 67,000 \\\text { Ezzard, capital } & 17,000 \\\text { Tillman, capital } & 96,000\end{array} 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?

A)$36,000.
B)$0.
C)$2,500.
D)$38,250.
E)$67,250.
Question
The Henry, Isaac, and Jacobs partnership was about to enter liquidation with the following account balances:  Cash $90,000 Liabilities $60,000 Noncash assets 300,000 Henry, capital 80,000 Isaac, capital 110,000 Jacobs, capital 140,000 Total $390,000 Total $390,000\begin{array}{lrlrl}\text { Cash } & \$ 90,000 & \text { Liabilities } & \$ 60,000 \\\text { Noncash assets } & 300,000 & \text { Henry, capital } & 80,000\\&&\text { Isaac, capital } & 110,000 \\&&\text { Jacobs, capital } & 140,000 \\\text { Total } & \$ 390,000&\text { Total } & \$ 390,000\end{array} 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
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 $450,000 Total $450,000\begin{array}{lrlr}\text { Cash } & \$ 16,000 & \text { Liabilities } & \$ 150,000 \\\text { Noncash assets } & 434,000 & \text { Abrams, capital } & 80,000\\&&\text { Bartle, capital } & 90,000 \\&&\text { Creighton, capital } & 130,000 \\\text { Total }&\$450,000&\text { Total } & \$ 450,000\end{array} 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?

A)Abrams.
B)Bartle.
C)Creighton.
D)Abrams and Creighton.
E)Abrams and Bartle.
Question
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\begin{array} { l r } \text { Ding, capital } & \$ 60,000 \\\text { Laurel, capital } & 67,000 \\\text { Ezzard, capital } & 17,000 \\\text { Tillman, capital } & 96,000\end{array} 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 Ezzard's creditors would have received?

A)$36,000.
B)$0.
C)$2,500.
D)$38,250.
E)$67,250.
Question
A local partnership was in the process of liquidating and reported the following capital balances:  Justice, capital (40% share of all profits and losses )$23,000 Zobart, capital (35%)22,000 Douglass, capital (25%)(14,000)\begin{array}{lc}\text { Justice, capital }(40 \% \text { share of all profits and losses }) & \$ 23,000 \\\text { Zobart, capital }(35 \%) & 22,000 \\\text { Douglass, capital }(25 \%) & (14,000)\end{array} 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
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 $450,000 Total $450,000\begin{array}{lrlr}\text { Cash } & \$ 16,000 & \text { Liabilities } & \$ 150,000 \\\text { Noncash assets } & 434,000 & \text { Abrams, capital } & 80,000\\&&\text { Bartle, capital } & 90,000 \\&&\text { Creighton, capital } & 130,000 \\\text { Total }&\$450,000&\text { Total } & \$ 450,000\end{array} 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?

A)$43,200.
B)$46,800.
C)$40,000.
D)$42,400.
E)$43,100.
Question
The Henry, Isaac, and Jacobs partnership was about to enter liquidation with the following account balances:  Cash $90,000 Liabilities $60,000 Noncash assets 300,000 Henry, capital 80,000 Isaac, capital 110,000 Jacobs, capital 140,000 Total $390,000 Total $390,000\begin{array}{lrlrl}\text { Cash } & \$ 90,000 & \text { Liabilities } & \$ 60,000 \\\text { Noncash assets } & 300,000 & \text { Henry, capital } & 80,000\\&&\text { Isaac, capital } & 110,000 \\&&\text { Jacobs, capital } & 140,000 \\\text { Total } & \$ 390,000&\text { Total } & \$ 390,000\end{array} 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 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\begin{array}{|l|l|l|l|}\hline & \text { Henry } & \text { Isaac } & \text { Jacobs } \\\hline \text { A) } & \$ 33,000 & \$ 36,000 & \$ 51,000 \\\hline \text { B) } & \$ 28,000 & \$ 36,000 & \$ 56,000 \\\hline \text { C) } & \$ 29,333 & \$ 32,000 & \$ 58,667 \\\hline \text { D) } & \$ 24,000 & \$ 48,000 & \$ 48,000 \\\hline \text { E) } & \$ 38,000 & \$ 26,000 & \$ 56,000 \\\hline\end{array}

A)Option A
B)Option B
C)Option C
D)Option D
E)Option E
Question
The Keaton,Lewis,and Meador partnership had the following balance sheet just before entering liquidation:  Cash $10,000 Liabilities $130,000 Noncash assets 300,000 Keaton, capital 60,000 Lewis, capital 40,000 Meador, capital 80,000 Total $310,000 Total $310,000\begin{array}{lrlr}\text { Cash } & \$ 10,000 & \text { Liabilities } & \$ 130,000 \\\text { Noncash assets } & 300,000 & \text { Keaton, capital } & 60,000\\&&\text { Lewis, capital } & 40,000 \\&&\text { Meador, capital } & 80,000 \\\text { Total } & \$ 310,000&\text { Total } & \$ 310,000\end{array} 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 Lewis was personally insolvent and could not contribute any assets to the partnership,while Keaton and Meador were both solvent.What amount of cash would Keaton have received from the distribution of partnership assets?

A)$38,000.
B)$30,000.
C)$24,000.
D)$34,000.
E)$31,600.
Question
The following account balances were available for the Perry, Quincy, and Renquist partnership just before it entered liquidation:  Cash $90,000 Liabilities $170,000 Noncash assets 300,000 Perry, capital 70,000 Quincy, capital 50,000 Renquist, capital 100,000 Total $390,000‾ Total $390,000\begin{array} { l r l r } \text { Cash } & \$ 90,000 & \text { Liabilities } & \$ 170,000 \\\text { Noncash assets } & 300,000 & \text { Perry, capital } & 70,000 \\& & \text { Quincy, capital } & 50,000 \\& & \text { Renquist, capital } & 100,000 \\\text { Total } & \underline { \$ 390,000 } & \text { Total } & \$ 390,000 \\\end{array} Inlcuded 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?

A)$185,000
B)$170,000
C)$165,000
D)$95,000
E)$90,000
Question
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 if there is no income-sharing plan in the partnership contract.
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
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)Writeoff of remaining unpaid debts.
Question
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)$5,000.
B)$9,000.
C)$18,000.
D)$28,000.
E)$55,000.
Question
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 Harry receive in the final settlement?

A)$5,000.
B)$9,000.
C)$18,000.
D)$28,000.
E)$55,000.
Question
What is the purpose of a predistribution plan?
Question
What is the preferred method of resolving a partner's deficit balance,according to the Uniform Partnership Act?

A)Partners never have a deficit balance.
B)The other partners must contribute personal assets to cover the deficit balance.
C)The partnership must sell assets in order to cover the deficit balance.
D)The partner with a deficit balance must contribute personal assets to cover the deficit balance.
E)The partner with a deficit balance contributes personal assets only if those personal assets exceed personal liabilities.
Question
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
White, Sands, and Luke has the following capital 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?  White  Sands  Luke \begin{array} { ccc } && \text { White } & { \text { Sands } } && { \text { Luke } } \\\end{array}
A. $60,000$40,000$100,000\begin{array} { ccc } & \$ 60,000 & \$ 40,000 & \$ 100,000 \\\end{array}
B. $6,000$44,000$150,000\begin{array} { ccc } & \$ 6,000 && \$ 44,000 & \$ 150,000 \\\end{array}
C. $48,148$65,432$86,420\begin{array} { ccc } & \$ 48,148 && \$ 65,432 & \$ 86,420 \\\end{array}
D. $12,000$68,000$120,000\begin{array} { ccc } & \$ 12,000 && \$ 68,000 & \$ 120,000 \\\end{array}
E. $60,000$100,000$40,000\begin{array} { ccc } & \$ 60,000 && \$ 100,000 & \$ 40,000 \\\end{array}

A)Option A
B)Option B
C)Option C
D)Option D
E)Option E
Question
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)$0.
B)$27,500.
C)$45,000.
D)$47,500.
E)$50,000.
Question
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?
Question
What is the role of the accountant during the liquidation process?
Question
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 balances of partners with positive capital balances.
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 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
A local partnership has assets of cash of $130,000 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
Harding,Jones,and Sandy is in the process of liquidating and the partners have the following capital balances;24,000,24,000,and (9,000)respectively.The partners share all profits and losses 16%,48%,and 36%,respectively.Sandy has indicated that the (9,000)deficit will be covered with a forthcoming contribution.The remaining partners have requested to immediately receive $20,000 in cash that is available.How should this cash be distributed?

A)Harding $5,000;Jones $15,000.
B)Harding $17,000;Jones $3,000.
C)Harding $11,154;Jones $8,846.
D)Harding $14,297;Jones $5,703.
E)Harding $12,500;Jones $7,500.
Question
A local partnership has assets of cash of $130,000 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 Roberts receive in the final settlement?

A)$0.
B)$30,000.
C)$217,500.
D)$362,500.
E)$502,500.
Question
White, Sands, and Luke has the following capital 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?  White  Sands  Luke  A) $15,000$25,000$50,000 B) $0$18,947$71,053 C) $0$40,000$50,000 D) $0$10,588$79,412 E) $27,000$18,000$45,000\begin{array}{|l|l|r|l|}\hline &{\text { White }} &{\text { Sands }} & \text { Luke } \\\hline \text { A) } & \$ 15,000 & \$ 25,000 & \$ 50,000 \\\hline \text { B) } & \$ \quad 0 & \$ 18,947 & \$ 71,053 \\\hline \text { C) } & \$ \quad 0 & \$ 40,000 & \$ 50,000 \\\hline \text { D) } & \$ \quad 0 & \$ 10,588 & \$ 79,412 \\\hline \text { E) } & \$ 27,000 & \$ 18,000 & \$ 45,000 \\\hline\end{array}

A)Option A
B)Option B
C)Option C
D)Option D
E)Option E
Question
What financial schedule would be prepared for a partnership that has begun liquidation but has not yet completed the process? What is the purpose of this schedule?
Question
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?
Question
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?
Question
Which item is not shown on the schedule 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 balances of the partners.
Question
Which of the following statements is false concerning the partnership Schedule of Liquidation?

A)Liquidations may take a considerable length of time to complete.
B)Frequent reporting by the accountant is rarely necessary.
C)The Schedule of Liquidation provides a listing of transactions to date,current cash,and capital balances.
D)The Schedule of Liquidation provides a listing of property still held by the partnership as well as liabilities remaining unpaid.
E)The Schedule of Liquidation keeps creditors and partners apprised of the results of the process of dissolution.
Question
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:
  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.   -Develop a predistribution plan for this partnership,assuming $12,000 of liquidation expenses are expected to be paid. \begin{array}{c} \begin{array}{|l} \hline\\ \hline \text {Beginning balances}\\ \hline\text {Assumed  \$ 96,000  loss (Schedule A)}\\ \hline\text {Subtotal}\\ \hline \text {Assumed  <span class=$32,500 \$ 32,500 loss (Schedule B)}\\ \hline\text {Total} \\ \hline \end{array} \begin{array}{|c|} \hline \text { Hardin } \\ \hline \$ 96,000 \\ \hline \underline{(48,000)}\\ \hline\$ 48,000 \\ \hline(19,500) \\ \hline \$ 28.500 \\ \hline \end{array} \begin{array}{l|} \hline\text { Sutton } \\ \hline \$ 45,000 \\ \hline \underline{(32,000)}\\ \hline\$ 13,000 \\ \hline \underline{(13,000)}\\ \hline\underline{{\$ \quad 0}}\\ \hline \end{array} \begin{array}{l|} \hline\text { Williams } \\ \hline\$ 16,000 \\ \hline\underline{(16,000) }\\ \hline \$ \quad 0 \\ \hline\underline{ \quad 0} \\ \hline \$\underline{\quad 0}\\ \hline \end{array} \end{array}
" class="answers-bank-image d-inline" loading="lazy" >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.


-Develop a predistribution plan for this partnership,assuming $12,000 of liquidation expenses are expected to be paid. Beginning balancesAssumed $96,000 loss (Schedule A)SubtotalAssumed $32,500 loss (Schedule B)Total Hardin $96,000(48,000)‾$48,000(19,500)$28.500 Sutton $45,000(32,000)‾$13,000(13,000)‾$0‾ Williams $16,000(16,000)‾$00‾$0‾\begin{array}{c}\begin{array}{|l}\hline\\\hline \text {Beginning balances}\\ \hline\text {Assumed \( \$ 96,000 \) loss (Schedule A)}\\ \hline\text {Subtotal}\\\hline \text {Assumed \( \$ 32,500 \) loss (Schedule B)}\\ \hline\text {Total} \\\hline \end{array}\begin{array}{|c|}\hline \text { Hardin } \\\hline \$ 96,000 \\\hline \underline{(48,000)}\\\hline\$ 48,000 \\\hline(19,500) \\\hline \$ 28.500 \\\hline \end{array}\begin{array}{l|}\hline\text { Sutton } \\\hline \$ 45,000 \\\hline \underline{(32,000)}\\\hline\$ 13,000 \\\hline \underline{(13,000)}\\\hline\underline{{\$ \quad 0}}\\\hline \end{array}\begin{array}{l|}\hline\text { Williams } \\\hline\$ 16,000 \\\hline\underline{(16,000) }\\\hline \$ \quad 0 \\\hline\underline{ \quad 0} \\\hline \$\underline{\quad 0}\\\hline\end{array}\end{array}
Question
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:
 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.<div style=padding-top: 35px> 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.
Question
As of January 1,2011,the partnership of Canton,Yulls,and Garr had the following account balances and percentages for the sharing of profits and losses:

 Cash $80,000 Noncash assets 205,000 Liabilities 47,000 Canton, capital (30%)138,000 Yulls, capital (40%)119,500 Garr, capital (30%)(19,500)\begin{array} { | l | r | } \hline \text { Cash } & \$ 80,000 \\\hline \text { Noncash assets } & 205,000 \\\hline \text { Liabilities } & 47,000 \\\hline \text { Canton, capital } ( 30 \% ) & 138,000 \\\hline \text { Yulls, capital } ( 40 \% ) & 119,500 \\\hline \text { Garr, capital } ( 30 \% ) & ( 19,500 ) \\\hline\end{array}
The partnership incurred losses in recent years and decided to liquidate.The liquidation expenses were expected to be $10,000.

-How much of the existing cash balance could be distributed safely to partners at this time?
Question
On January 1,2011,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:

 Debit  Credit  Cash $23,400 Accounts Receivable 85,800 Inventory 67,600 Machinery and equipment, net 245,700 Won, loan 39,000‾ Accounts payable $68,900 Cadel, loan 26,000 Won, capital 153,400 Cadel, capital 117,000 Dax, capital 96,200 Totals $461,500$461,500\begin{array} { | l | r | r | } \hline & { \text { Debit } } & { \text { Credit } } \\\hline \text { Cash } & \$ 23,400 & \\\hline \text { Accounts Receivable } & 85,800 & \\\hline \text { Inventory } & 67,600 & \\\hline \text { Machinery and equipment, net } & 245,700 & \\\hline \text { Won, loan } & \underline { 39,000 } & \\\hline \text { Accounts payable } & & \$ 68,900 \\\hline \text { Cadel, loan } & & 26,000 \\\hline \text { Won, capital } & & 153,400 \\\hline \text { Cadel, capital } & & 117,000 \\\hline \text { Dax, capital } & & 96,200 \\\hline \text { Totals } & \$ 461,500 & \$ 461,500 \\\hline\end{array} 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:  January $66,300 was collected on the accounts receivable; the balance was deemed to  be uncollectible. $49,400 was received for the entire inventory. $2,600 in liquidation expenses were paid. $65,000 was paid to outside creditors, after receiving a $3,900 credit memo  from a creditor on January 11. Cash of $13,000 was retained at the end of the month to cover unrecorded  liabilities and anticipated expenses. The balance of cash was distributed to  the partners.  February $3,900 in liquidation expenses were paid. $7,800 in cash was retained at the end of the month to cover unrecorded  liabilities and anticipated expenses.  March $189,800 was received on the sale of all machinery and equipment. $6,500 in final liquidation expenses were paid.  No cash was retained as all cash was distributed to partners. \begin{array} { | l | l | } \hline \text { January } & \$ 66,300 \text { was collected on the accounts receivable; the balance was deemed to } \\\hline & \text { be uncollectible. } \\\hline & \$ 49,400 \text { was received for the entire inventory. } \\\hline & \$ 2,600 \text { in liquidation expenses were paid. } \\\hline & \$ 65,000 \text { was paid to outside creditors, after receiving a } \$ 3,900 \text { credit memo } \\\hline & \text { from a creditor on January } 11 . \\\hline & \text { Cash of } \$ 13,000 \text { was retained at the end of the month to cover unrecorded } \\\hline & \text { liabilities and anticipated expenses. The balance of cash was distributed to } \\\hline & \text { the partners. } \\\hline \text { February } & \$ 3,900 \text { in liquidation expenses were paid. } \\\hline & \$ 7,800 \text { in cash was retained at the end of the month to cover unrecorded } \\\hline & \text { liabilities and anticipated expenses. } \\\hline \text { March } & \$ 189,800 \text { was received on the sale of all machinery and equipment. } \\\hline & \$ 6,500 \text { in final liquidation expenses were paid. } \\\hline & \text { No cash was retained as all cash was distributed to partners. } \\\hline\end{array}

-Prepare a schedule to calculate the safe installment payments to be made to the partners at the end of February.
Question
What events or circumstances might force the termination of a partnership and liquidation of its assets?
Question
On January 1,2011,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:

 Debit  Credit  Cash $23,400 Accounts Receivable 85,800 Inventory 67,600 Machinery and equipment, net 245,700 Won, loan 39,000‾ Accounts payable $68,900 Cadel, loan 26,000 Won, capital 153,400 Cadel, capital 117,000 Dax, capital 96,200 Totals $461,500$461,500\begin{array} { | l | r | r | } \hline & { \text { Debit } } & { \text { Credit } } \\\hline \text { Cash } & \$ 23,400 & \\\hline \text { Accounts Receivable } & 85,800 & \\\hline \text { Inventory } & 67,600 & \\\hline \text { Machinery and equipment, net } & 245,700 & \\\hline \text { Won, loan } & \underline { 39,000 } & \\\hline \text { Accounts payable } & & \$ 68,900 \\\hline \text { Cadel, loan } & & 26,000 \\\hline \text { Won, capital } & & 153,400 \\\hline \text { Cadel, capital } & & 117,000 \\\hline \text { Dax, capital } & & 96,200 \\\hline \text { Totals } & \$ 461,500 & \$ 461,500 \\\hline\end{array} 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:  January $66,300 was collected on the accounts receivable; the balance was deemed to  be uncollectible. $49,400 was received for the entire inventory. $2,600 in liquidation expenses were paid. $65,000 was paid to outside creditors, after receiving a $3,900 credit memo  from a creditor on January 11. Cash of $13,000 was retained at the end of the month to cover unrecorded  liabilities and anticipated expenses. The balance of cash was distributed to  the partners.  February $3,900 in liquidation expenses were paid. $7,800 in cash was retained at the end of the month to cover unrecorded  liabilities and anticipated expenses.  March $189,800 was received on the sale of all machinery and equipment. $6,500 in final liquidation expenses were paid.  No cash was retained as all cash was distributed to partners. \begin{array} { | l | l | } \hline \text { January } & \$ 66,300 \text { was collected on the accounts receivable; the balance was deemed to } \\\hline & \text { be uncollectible. } \\\hline & \$ 49,400 \text { was received for the entire inventory. } \\\hline & \$ 2,600 \text { in liquidation expenses were paid. } \\\hline & \$ 65,000 \text { was paid to outside creditors, after receiving a } \$ 3,900 \text { credit memo } \\\hline & \text { from a creditor on January } 11 . \\\hline & \text { Cash of } \$ 13,000 \text { was retained at the end of the month to cover unrecorded } \\\hline & \text { liabilities and anticipated expenses. The balance of cash was distributed to } \\\hline & \text { the partners. } \\\hline \text { February } & \$ 3,900 \text { in liquidation expenses were paid. } \\\hline & \$ 7,800 \text { in cash was retained at the end of the month to cover unrecorded } \\\hline & \text { liabilities and anticipated expenses. } \\\hline \text { March } & \$ 189,800 \text { was received on the sale of all machinery and equipment. } \\\hline & \$ 6,500 \text { in final liquidation expenses were paid. } \\\hline & \text { No cash was retained as all cash was distributed to partners. } \\\hline\end{array}

-Prepare a schedule to calculate the safe payments to be made to the partners at the end of January.
Question
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
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?
Question
If the noncash assets are sold for $105,000,what would be the maximum amount of cash that Canton could expect to receive?
Question
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:
 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.   -Compute safe cash payments after the noncash assets have been sold and the liquidation expenses have been paid.<div style=padding-top: 35px> 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.
Question
What would be the maximum amount Garr might have to contribute to the partnership to eliminate a deficit balance in his account?
Question
Why is a Schedule of Liquidation prepared?
Question
On January 1,2011,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:

 Debit  Credit  Cash $23,400 Accounts Receivable 85,800 Inventory 67,600 Machinery and equipment, net 245,700 Won, loan 39,000‾ Accounts payable $68,900 Cadel, loan 26,000 Won, capital 153,400 Cadel, capital 117,000 Dax, capital 96,200 Totals $461,500$461,500\begin{array} { | l | r | r | } \hline & { \text { Debit } } & { \text { Credit } } \\\hline \text { Cash } & \$ 23,400 & \\\hline \text { Accounts Receivable } & 85,800 & \\\hline \text { Inventory } & 67,600 & \\\hline \text { Machinery and equipment, net } & 245,700 & \\\hline \text { Won, loan } & \underline { 39,000 } & \\\hline \text { Accounts payable } & & \$ 68,900 \\\hline \text { Cadel, loan } & & 26,000 \\\hline \text { Won, capital } & & 153,400 \\\hline \text { Cadel, capital } & & 117,000 \\\hline \text { Dax, capital } & & 96,200 \\\hline \text { Totals } & \$ 461,500 & \$ 461,500 \\\hline\end{array} 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:  January $66,300 was collected on the accounts receivable; the balance was deemed to  be uncollectible. $49,400 was received for the entire inventory. $2,600 in liquidation expenses were paid. $65,000 was paid to outside creditors, after receiving a $3,900 credit memo  from a creditor on January 11. Cash of $13,000 was retained at the end of the month to cover unrecorded  liabilities and anticipated expenses. The balance of cash was distributed to  the partners.  February $3,900 in liquidation expenses were paid. $7,800 in cash was retained at the end of the month to cover unrecorded  liabilities and anticipated expenses.  March $189,800 was received on the sale of all machinery and equipment. $6,500 in final liquidation expenses were paid.  No cash was retained as all cash was distributed to partners. \begin{array} { | l | l | } \hline \text { January } & \$ 66,300 \text { was collected on the accounts receivable; the balance was deemed to } \\\hline & \text { be uncollectible. } \\\hline & \$ 49,400 \text { was received for the entire inventory. } \\\hline & \$ 2,600 \text { in liquidation expenses were paid. } \\\hline & \$ 65,000 \text { was paid to outside creditors, after receiving a } \$ 3,900 \text { credit memo } \\\hline & \text { from a creditor on January } 11 . \\\hline & \text { Cash of } \$ 13,000 \text { was retained at the end of the month to cover unrecorded } \\\hline & \text { liabilities and anticipated expenses. The balance of cash was distributed to } \\\hline & \text { the partners. } \\\hline \text { February } & \$ 3,900 \text { in liquidation expenses were paid. } \\\hline & \$ 7,800 \text { in cash was retained at the end of the month to cover unrecorded } \\\hline & \text { liabilities and anticipated expenses. } \\\hline \text { March } & \$ 189,800 \text { was received on the sale of all machinery and equipment. } \\\hline & \$ 6,500 \text { in final liquidation expenses were paid. } \\\hline & \text { No cash was retained as all cash was distributed to partners. } \\\hline\end{array}

-Prepare a schedule to calculate the safe payments to be made to the partners at the end of March.
Question
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
What should occur when a solvent partner has a deficit balance?
Question
For a partnership,how should liquidation gains and losses be accounted for?
Question
What is a safe cash payment?
Question
As of January 1,2011,the partnership of Canton,Yulls,and Garr had the following account balances and percentages for the sharing of profits and losses:

 Cash $80,000 Noncash assets 205,000 Liabilities 47,000 Canton, capital (30%)138,000 Yulls, capital (40%)119,500 Garr, capital (30%)(19,500)\begin{array} { | l | r | } \hline \text { Cash } & \$ 80,000 \\\hline \text { Noncash assets } & 205,000 \\\hline \text { Liabilities } & 47,000 \\\hline \text { Canton, capital } ( 30 \% ) & 138,000 \\\hline \text { Yulls, capital } ( 40 \% ) & 119,500 \\\hline \text { Garr, capital } ( 30 \% ) & ( 19,500 ) \\\hline\end{array}
The partnership incurred losses in recent years and decided to liquidate.The liquidation expenses were expected to be $10,000.

-How much cash should each partner receive at this time,pursuant to a proposed schedule of liquidation?
Question
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.
Question
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.
Question
The partners of Donald,Chief & Berry LLP decided to liquidate on August 1,2011.The balance sheet of the partnership is as follows,with the profit and loss ratio of 25%,45%,and 30%,respectively.

\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad DONALD, CHIEF & BERRY LLP\text {DONALD, CHIEF \& BERRY LLP}
\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad Balance Sheet\text {Balance Sheet}
\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad August 1, 2011\text {August 1, 2011}

\quad \quad \quad \quad \quad \quad \quad \quad Assets\text {Assets} \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad Liabilities & Partners’ Capital\text {Liabilities \& Partners' Capital}
 Cash $60,000 Trade accounts payable $130,000 Loan receivable from Donald 40,000 Loan payable to Chief 60,000 Other assets 500,000 Donald, capital 140,000 Chief, capital 160,000 Berry, capital 110,000 Total $ $otal $600,000\begin{array}{lrlr}\text { Cash } & \$ 60,000 & \text { Trade accounts payable } & \$ 130,000 \\\text { Loan receivable from Donald } & 40,000 & \text { Loan payable to Chief } & 60,000 \\\text { Other assets } & 500,000 & \text { Donald, capital } & 140,000 \\& & \text { Chief, capital } & 160,000 \\& & \text { Berry, capital } & 110,000 \\\text { Total } & \$ \text { \$otal } & \$ 600,000\end{array} 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 1,2011,to record the offset of the loan receivable from Donald.
Question
The partners of Donald,Chief & Berry LLP decided to liquidate on August 1,2011.The balance sheet of the partnership is as follows,with the profit and loss ratio of 25%,45%,and 30%,respectively.

\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad DONALD, CHIEF & BERRY LLP\text {DONALD, CHIEF \& BERRY LLP}
\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad Balance Sheet\text {Balance Sheet}
\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad August 1, 2011\text {August 1, 2011}

\quad \quad \quad \quad \quad \quad \quad \quad Assets\text {Assets} \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad Liabilities & Partners’ Capital\text {Liabilities \& Partners' Capital}
 Cash $60,000 Trade accounts payable $130,000 Loan receivable from Donald 40,000 Loan payable to Chief 60,000 Other assets 500,000 Donald, capital 140,000 Chief, capital 160,000 Berry, capital 110,000 Total $ $otal $600,000\begin{array}{lrlr}\text { Cash } & \$ 60,000 & \text { Trade accounts payable } & \$ 130,000 \\\text { Loan receivable from Donald } & 40,000 & \text { Loan payable to Chief } & 60,000 \\\text { Other assets } & 500,000 & \text { Donald, capital } & 140,000 \\& & \text { Chief, capital } & 160,000 \\& & \text { Berry, capital } & 110,000 \\\text { Total } & \$ \text { \$otal } & \$ 600,000\end{array} 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 1,2011,to record the realization of Other assets.
Question
The partners of Donald,Chief & Berry LLP decided to liquidate on August 1,2011.The balance sheet of the partnership is as follows,with the profit and loss ratio of 25%,45%,and 30%,respectively.

\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad DONALD, CHIEF & BERRY LLP\text {DONALD, CHIEF \& BERRY LLP}
\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad Balance Sheet\text {Balance Sheet}
\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad August 1, 2011\text {August 1, 2011}

\quad \quad \quad \quad \quad \quad \quad \quad Assets\text {Assets} \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad Liabilities & Partners’ Capital\text {Liabilities \& Partners' Capital}
 Cash $60,000 Trade accounts payable $130,000 Loan receivable from Donald 40,000 Loan payable to Chief 60,000 Other assets 500,000 Donald, capital 140,000 Chief, capital 160,000 Berry, capital 110,000 Total $ $otal $600,000\begin{array}{lrlr}\text { Cash } & \$ 60,000 & \text { Trade accounts payable } & \$ 130,000 \\\text { Loan receivable from Donald } & 40,000 & \text { Loan payable to Chief } & 60,000 \\\text { Other assets } & 500,000 & \text { Donald, capital } & 140,000 \\& & \text { Chief, capital } & 160,000 \\& & \text { Berry, capital } & 110,000 \\\text { Total } & \$ \text { \$otal } & \$ 600,000\end{array} 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 1,2011,to record payment of liabilities.
Question
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\begin{array} { | l | r | } \hline \text { Cash } & \$ 40,000 \\\hline \text { Noncash assets } & 80,000 \\\hline \text { Liabilities } & 20,000 \\\hline \text { Loan Payable to Rogers } & 10,000 \\\hline \text { Rogers, Capital } & 35,000 \\\hline \text { Dennis, Capital } & 30,000 \\\hline \text { Berry, Capital } & 25,000 \\\hline\end{array}
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
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\begin{array} { | l | r | } \hline \text { Cash } & \$ 40,000 \\\hline \text { Noncash assets } & 80,000 \\\hline \text { Liabilities } & 20,000 \\\hline \text { Loan Payable to Rogers } & 10,000 \\\hline \text { Rogers, Capital } & 35,000 \\\hline \text { Dennis, Capital } & 30,000 \\\hline \text { Berry, Capital } & 25,000 \\\hline\end{array}
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
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\begin{array} { | l | r | } \hline \text { Cash } & \$ 40,000 \\\hline \text { Noncash assets } & 80,000 \\\hline \text { Liabilities } & 20,000 \\\hline \text { Loan Payable to Rogers } & 10,000 \\\hline \text { Rogers, Capital } & 35,000 \\\hline \text { Dennis, Capital } & 30,000 \\\hline \text { Berry, Capital } & 25,000 \\\hline\end{array}
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
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\begin{array} { | l | r | } \hline \text { Cash } & \$ 40,000 \\\hline \text { Noncash assets } & 80,000 \\\hline \text { Liabilities } & 20,000 \\\hline \text { Loan Payable to Rogers } & 10,000 \\\hline \text { Rogers, Capital } & 35,000 \\\hline \text { Dennis, Capital } & 30,000 \\\hline \text { Berry, Capital } & 25,000 \\\hline\end{array}
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
Prepare the schedule to compute the cash payments to the partners.
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Deck 10: Partnerships: Termination and Liquidation
1
The following account balances were available for the Perry, Quincy, and Renquist partnership just before it entered liquidation:  Cash $90,000 Liabilities $170,000 Noncash assets 300,000 Perry, capital 70,000 Quincy, capital 50,000 Renquist, capital 100,000 Total $390,000‾ Total $390,000\begin{array} { l r l r } \text { Cash } & \$ 90,000 & \text { Liabilities } & \$ 170,000 \\\text { Noncash assets } & 300,000 & \text { Perry, capital } & 70,000 \\& & \text { Quincy, capital } & 50,000 \\& & \text { Renquist, capital } & 100,000 \\\text { Total } & \underline { \$ 390,000 } & \text { Total } & \$ 390,000 \\\end{array} Inlcuded 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?

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.
Any amount in excess of $190,000.
2
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\begin{array} { l r } \text { Ding, capital } & \$ 60,000 \\\text { Laurel, capital } & 67,000 \\\text { Ezzard, capital } & 17,000 \\\text { Tillman, capital } & 96,000\end{array} 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?

A)$36,000.
B)$0.
C)$2,500.
D)$38,720.
E)$67,250.
$2,500.
3
The Henry, Isaac, and Jacobs partnership was about to enter liquidation with the following account balances:  Cash $90,000 Liabilities $60,000 Noncash assets 300,000 Henry, capital 80,000 Isaac, capital 110,000 Jacobs, capital 140,000 Total $390,000 Total $390,000\begin{array}{lrlrl}\text { Cash } & \$ 90,000 & \text { Liabilities } & \$ 60,000 \\\text { Noncash assets } & 300,000 & \text { Henry, capital } & 80,000\\&&\text { Isaac, capital } & 110,000 \\&&\text { Jacobs, capital } & 140,000 \\\text { Total } & \$ 390,000&\text { Total } & \$ 390,000\end{array} 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.
$25,000.
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 balances were as follows:  Dancey, capital $72,000 Reese, capital 32,000 Newman, capital 52,000 Jahn, capital 24,000\begin{array} { l r } \text { Dancey, capital } & \$ 72,000 \\\text { Reese, capital } & 32,000 \\\text { Newman, capital } & 52,000 \\\text { Jahn, capital } & 24,000\end{array} 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 by Dancey,Reese,and Newman.The total distribution would be $60,000 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 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.
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5
A local partnership was in the process of liquidating and reported the following capital balances:  Justice, capital (40% share of all profits and losses )$23,000 Zobart, capital (35%)22,000 Douglass, capital (25%)(14,000)\begin{array}{lc}\text { Justice, capital }(40 \% \text { share of all profits and losses }) & \$ 23,000 \\\text { Zobart, capital }(35 \%) & 22,000 \\\text { Douglass, capital }(25 \%) & (14,000)\end{array} 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 Justice receive?

A)$15,467.
B)$15,533.
C)$17,333.
D)$16,533.
E)$15,867.
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6
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\begin{array} { l r } \text { Ding, capital } & \$ 60,000 \\\text { Laurel, capital } & 67,000 \\\text { Ezzard, capital } & 17,000 \\\text { Tillman, capital } & 96,000\end{array} 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?

A)$36,000.
B)$0.
C)$2,500.
D)$38,250.
E)$67,250.
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7
When a partnership is insolvent and a partner has a deficit capital balance,that partner is legally required to:

A)declare personal bankruptcy.
B)initiate legal proceedings against the partnership.
C)contribute cash to the partnership.
D)deliver a note payable to the partnership with specific payment terms.
E)None of the above.The partner has no legal responsibility to cover the capital deficit balance.
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8
The Keaton,Lewis,and Meador partnership had the following balance sheet just before entering liquidation:  Cash $100,000 Liabilities $40,000 Noncash assets 210,000‾ Keaton, Capital 90,000 Lewis, Capital 60,000 Meador, Capital 120,000‾ Total $310,000‾ Total $310,000‾\begin{array} { | l | r | l | l | r | } \hline \text { Cash } & \$ 100,000 & & \text { Liabilities } & \$ 40,000 \\\hline \text { Noncash assets } & \underline { 210,000 } & & \text { Keaton, Capital } & 90,000 \\\hline & & & \text { Lewis, Capital } & 60,000 \\\hline & & & \text { Meador, Capital } & \underline { 120,000 } \\\hline \text { Total } & \$ \underline { 310,000 } & & \text { Total } & \$ \underline { 310,000 } \\\hline\end{array} Keaton,Lewis,and Meador share profits and losses in a ratio of 2:4:4.Noncash assets were sold for $60,000.How much will each partner receive in the liquidation?  Keaton  Lewis  Meador  A) $40,000$26,667$53,333 B) $24,000$48,000$48,000 C) $60,000$0$60,000 D) $0$0$120,000 E) $36,000$12,000$72,000\begin{array} { | l | c | r |r | } \hline & \text { Keaton } & { \text { Lewis } } & { \text { Meador } } \\\hline \text { A) } & \$ 40,000 & \$26,667 & \$ 53,333 \\\hline \text { B) } & \$ 24,000 & \$ 48,000 & \$ 48,000 \\\hline \text { C) } & \$ 60,000 & \$ 0 & \$60,000 \\\hline \text { D) } & \$ 0 & \$ 0 & \$ 120,000\\\hline \text { E) } & \$ 36,000 & \$12,000 & \$72,000 \\\hline\end{array}

A)Option A
B)Option B
C)Option C
D)Option D
E)Option E
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9
The Keaton,Lewis,and Meador partnership had the following balance sheet just before entering liquidation:  Cash $100,000 Liabilities $40,000 Noncash assets 210,000‾ Keaton, Capital 90,000 Lewis, Capital 60,000 Meador, Capital 120,000‾ Total $310,000‾ Total $310,000‾\begin{array}{|l|r|l|l|r|}\hline \text { Cash } & \$ 100,000 & & \text { Liabilities } & \$ 40,000 \\\hline \text { Noncash assets } & \underline{210,000} & & \text { Keaton, Capital } & 90,000 \\\hline & & & \text { Lewis, Capital } & 60,000 \\\hline & & & \text { Meador, Capital } & \underline{120,000} \\\hline \text { Total } & \$ \underline{310,000} & & \text { Total } & \$ \underline{310,000} \\\hline\end{array} Keaton,Lewis,and Meador 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.How much would each partner receive of a total $60,000 distribution of cash?  Keaton  Lewis  Meador  A) $40,000$0$20,000 B) $12,000$24,000$24,000 C) $20,000$13,333$26,667 D) $60,000$0$0 E) $10,000$0$50,000\begin{array} { | l | c | r |r | } \hline & \text { Keaton } & { \text { Lewis } } & { \text { Meador } } \\\hline \text { A) } & \$ 40,000 & \$0 & \$ 20,000 \\\hline \text { B) } & \$ 12,000 & \$ 24,000 & \$ 24,000 \\\hline \text { C) } & \$ 20,000 & \$ 13,333 & \$ 26,667 \\\hline \text { D) } & \$ 60,000 & \$ 0 & \$ 0\\\hline \text { E) } & \$ 10,000 & \$ 0 & \$ 50,000 \\\hline\end{array}

A)Option A
B)Option B
C)Option C
D)Option D
E)Option E
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10
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 $450,000 Total $450,000\begin{array}{lrlr}\text { Cash } & \$ 16,000 & \text { Liabilities } & \$ 150,000 \\\text { Noncash assets } & 434,000 & \text { Abrams, capital } & 80,000\\&&\text { Bartle, capital } & 90,000 \\&&\text { Creighton, capital } & 130,000 \\\text { Total }&\$450,000&\text { Total } & \$ 450,000\end{array} 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 were paid and the noncash assets sold,Creighton had a deficit of $8,000.For what amount were the noncash assets sold?

A)$170,000.
B)$264,000.
C)$158,000.
D)$146,000.
E)$185,000.
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11
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\begin{array} { l r } \text { Dancey, capital } & \$ 72,000 \\\text { Reese, capital } & 32,000 \\\text { Newman, capital } & 52,000 \\\text { Jahn, capital } & 24,000\end{array} 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.
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12
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\begin{array} { l r } \text { Ding, capital } & \$ 60,000 \\\text { Laurel, capital } & 67,000 \\\text { Ezzard, capital } & 17,000 \\\text { Tillman, capital } & 96,000\end{array} 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?

A)$36,000.
B)$0.
C)$2,500.
D)$38,250.
E)$67,250.
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13
The Henry, Isaac, and Jacobs partnership was about to enter liquidation with the following account balances:  Cash $90,000 Liabilities $60,000 Noncash assets 300,000 Henry, capital 80,000 Isaac, capital 110,000 Jacobs, capital 140,000 Total $390,000 Total $390,000\begin{array}{lrlrl}\text { Cash } & \$ 90,000 & \text { Liabilities } & \$ 60,000 \\\text { Noncash assets } & 300,000 & \text { Henry, capital } & 80,000\\&&\text { Isaac, capital } & 110,000 \\&&\text { Jacobs, capital } & 140,000 \\\text { Total } & \$ 390,000&\text { Total } & \$ 390,000\end{array} 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.
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14
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 $450,000 Total $450,000\begin{array}{lrlr}\text { Cash } & \$ 16,000 & \text { Liabilities } & \$ 150,000 \\\text { Noncash assets } & 434,000 & \text { Abrams, capital } & 80,000\\&&\text { Bartle, capital } & 90,000 \\&&\text { Creighton, capital } & 130,000 \\\text { Total }&\$450,000&\text { Total } & \$ 450,000\end{array} 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?

A)Abrams.
B)Bartle.
C)Creighton.
D)Abrams and Creighton.
E)Abrams and Bartle.
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15
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\begin{array} { l r } \text { Ding, capital } & \$ 60,000 \\\text { Laurel, capital } & 67,000 \\\text { Ezzard, capital } & 17,000 \\\text { Tillman, capital } & 96,000\end{array} 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 Ezzard's creditors would have received?

A)$36,000.
B)$0.
C)$2,500.
D)$38,250.
E)$67,250.
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16
A local partnership was in the process of liquidating and reported the following capital balances:  Justice, capital (40% share of all profits and losses )$23,000 Zobart, capital (35%)22,000 Douglass, capital (25%)(14,000)\begin{array}{lc}\text { Justice, capital }(40 \% \text { share of all profits and losses }) & \$ 23,000 \\\text { Zobart, capital }(35 \%) & 22,000 \\\text { Douglass, capital }(25 \%) & (14,000)\end{array} 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.
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17
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 $450,000 Total $450,000\begin{array}{lrlr}\text { Cash } & \$ 16,000 & \text { Liabilities } & \$ 150,000 \\\text { Noncash assets } & 434,000 & \text { Abrams, capital } & 80,000\\&&\text { Bartle, capital } & 90,000 \\&&\text { Creighton, capital } & 130,000 \\\text { Total }&\$450,000&\text { Total } & \$ 450,000\end{array} 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?

A)$43,200.
B)$46,800.
C)$40,000.
D)$42,400.
E)$43,100.
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18
The Henry, Isaac, and Jacobs partnership was about to enter liquidation with the following account balances:  Cash $90,000 Liabilities $60,000 Noncash assets 300,000 Henry, capital 80,000 Isaac, capital 110,000 Jacobs, capital 140,000 Total $390,000 Total $390,000\begin{array}{lrlrl}\text { Cash } & \$ 90,000 & \text { Liabilities } & \$ 60,000 \\\text { Noncash assets } & 300,000 & \text { Henry, capital } & 80,000\\&&\text { Isaac, capital } & 110,000 \\&&\text { Jacobs, capital } & 140,000 \\\text { Total } & \$ 390,000&\text { Total } & \$ 390,000\end{array} 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 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\begin{array}{|l|l|l|l|}\hline & \text { Henry } & \text { Isaac } & \text { Jacobs } \\\hline \text { A) } & \$ 33,000 & \$ 36,000 & \$ 51,000 \\\hline \text { B) } & \$ 28,000 & \$ 36,000 & \$ 56,000 \\\hline \text { C) } & \$ 29,333 & \$ 32,000 & \$ 58,667 \\\hline \text { D) } & \$ 24,000 & \$ 48,000 & \$ 48,000 \\\hline \text { E) } & \$ 38,000 & \$ 26,000 & \$ 56,000 \\\hline\end{array}

A)Option A
B)Option B
C)Option C
D)Option D
E)Option E
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19
The Keaton,Lewis,and Meador partnership had the following balance sheet just before entering liquidation:  Cash $10,000 Liabilities $130,000 Noncash assets 300,000 Keaton, capital 60,000 Lewis, capital 40,000 Meador, capital 80,000 Total $310,000 Total $310,000\begin{array}{lrlr}\text { Cash } & \$ 10,000 & \text { Liabilities } & \$ 130,000 \\\text { Noncash assets } & 300,000 & \text { Keaton, capital } & 60,000\\&&\text { Lewis, capital } & 40,000 \\&&\text { Meador, capital } & 80,000 \\\text { Total } & \$ 310,000&\text { Total } & \$ 310,000\end{array} 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 Lewis was personally insolvent and could not contribute any assets to the partnership,while Keaton and Meador were both solvent.What amount of cash would Keaton have received from the distribution of partnership assets?

A)$38,000.
B)$30,000.
C)$24,000.
D)$34,000.
E)$31,600.
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20
The following account balances were available for the Perry, Quincy, and Renquist partnership just before it entered liquidation:  Cash $90,000 Liabilities $170,000 Noncash assets 300,000 Perry, capital 70,000 Quincy, capital 50,000 Renquist, capital 100,000 Total $390,000‾ Total $390,000\begin{array} { l r l r } \text { Cash } & \$ 90,000 & \text { Liabilities } & \$ 170,000 \\\text { Noncash assets } & 300,000 & \text { Perry, capital } & 70,000 \\& & \text { Quincy, capital } & 50,000 \\& & \text { Renquist, capital } & 100,000 \\\text { Total } & \underline { \$ 390,000 } & \text { Total } & \$ 390,000 \\\end{array} Inlcuded 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?

A)$185,000
B)$170,000
C)$165,000
D)$95,000
E)$90,000
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21
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 if there is no income-sharing plan in the partnership contract.
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.
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22
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)Writeoff of remaining unpaid debts.
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23
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)$5,000.
B)$9,000.
C)$18,000.
D)$28,000.
E)$55,000.
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24
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 Harry receive in the final settlement?

A)$5,000.
B)$9,000.
C)$18,000.
D)$28,000.
E)$55,000.
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25
What is the purpose of a predistribution plan?
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26
What is the preferred method of resolving a partner's deficit balance,according to the Uniform Partnership Act?

A)Partners never have a deficit balance.
B)The other partners must contribute personal assets to cover the deficit balance.
C)The partnership must sell assets in order to cover the deficit balance.
D)The partner with a deficit balance must contribute personal assets to cover the deficit balance.
E)The partner with a deficit balance contributes personal assets only if those personal assets exceed personal liabilities.
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27
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
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28
White, Sands, and Luke has the following capital 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?  White  Sands  Luke \begin{array} { ccc } && \text { White } & { \text { Sands } } && { \text { Luke } } \\\end{array}
A. $60,000$40,000$100,000\begin{array} { ccc } & \$ 60,000 & \$ 40,000 & \$ 100,000 \\\end{array}
B. $6,000$44,000$150,000\begin{array} { ccc } & \$ 6,000 && \$ 44,000 & \$ 150,000 \\\end{array}
C. $48,148$65,432$86,420\begin{array} { ccc } & \$ 48,148 && \$ 65,432 & \$ 86,420 \\\end{array}
D. $12,000$68,000$120,000\begin{array} { ccc } & \$ 12,000 && \$ 68,000 & \$ 120,000 \\\end{array}
E. $60,000$100,000$40,000\begin{array} { ccc } & \$ 60,000 && \$ 100,000 & \$ 40,000 \\\end{array}

A)Option A
B)Option B
C)Option C
D)Option D
E)Option E
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29
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)$0.
B)$27,500.
C)$45,000.
D)$47,500.
E)$50,000.
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29
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?
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30
What is the role of the accountant during the liquidation process?
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31
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 balances of partners with positive capital balances.
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 balances are assumed to absorb an equal share of any deficit balance(s).
E)There are no safe payments until the liquidation is complete.
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32
A local partnership has assets of cash of $130,000 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.
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33
Harding,Jones,and Sandy is in the process of liquidating and the partners have the following capital balances;24,000,24,000,and (9,000)respectively.The partners share all profits and losses 16%,48%,and 36%,respectively.Sandy has indicated that the (9,000)deficit will be covered with a forthcoming contribution.The remaining partners have requested to immediately receive $20,000 in cash that is available.How should this cash be distributed?

A)Harding $5,000;Jones $15,000.
B)Harding $17,000;Jones $3,000.
C)Harding $11,154;Jones $8,846.
D)Harding $14,297;Jones $5,703.
E)Harding $12,500;Jones $7,500.
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34
A local partnership has assets of cash of $130,000 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 Roberts receive in the final settlement?

A)$0.
B)$30,000.
C)$217,500.
D)$362,500.
E)$502,500.
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35
White, Sands, and Luke has the following capital 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?  White  Sands  Luke  A) $15,000$25,000$50,000 B) $0$18,947$71,053 C) $0$40,000$50,000 D) $0$10,588$79,412 E) $27,000$18,000$45,000\begin{array}{|l|l|r|l|}\hline &{\text { White }} &{\text { Sands }} & \text { Luke } \\\hline \text { A) } & \$ 15,000 & \$ 25,000 & \$ 50,000 \\\hline \text { B) } & \$ \quad 0 & \$ 18,947 & \$ 71,053 \\\hline \text { C) } & \$ \quad 0 & \$ 40,000 & \$ 50,000 \\\hline \text { D) } & \$ \quad 0 & \$ 10,588 & \$ 79,412 \\\hline \text { E) } & \$ 27,000 & \$ 18,000 & \$ 45,000 \\\hline\end{array}

A)Option A
B)Option B
C)Option C
D)Option D
E)Option E
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36
What financial schedule would be prepared for a partnership that has begun liquidation but has not yet completed the process? What is the purpose of this schedule?
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37
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?
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38
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?
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39
Which item is not shown on the schedule 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 balances of the partners.
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40
Which of the following statements is false concerning the partnership Schedule of Liquidation?

A)Liquidations may take a considerable length of time to complete.
B)Frequent reporting by the accountant is rarely necessary.
C)The Schedule of Liquidation provides a listing of transactions to date,current cash,and capital balances.
D)The Schedule of Liquidation provides a listing of property still held by the partnership as well as liabilities remaining unpaid.
E)The Schedule of Liquidation keeps creditors and partners apprised of the results of the process of dissolution.
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41
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:
  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.   -Develop a predistribution plan for this partnership,assuming $12,000 of liquidation expenses are expected to be paid. \begin{array}{c} \begin{array}{|l} \hline\\ \hline \text {Beginning balances}\\ \hline\text {Assumed  \$ 96,000  loss (Schedule A)}\\ \hline\text {Subtotal}\\ \hline \text {Assumed  <span class=$32,500 \$ 32,500 loss (Schedule B)}\\ \hline\text {Total} \\ \hline \end{array} \begin{array}{|c|} \hline \text { Hardin } \\ \hline \$ 96,000 \\ \hline \underline{(48,000)}\\ \hline\$ 48,000 \\ \hline(19,500) \\ \hline \$ 28.500 \\ \hline \end{array} \begin{array}{l|} \hline\text { Sutton } \\ \hline \$ 45,000 \\ \hline \underline{(32,000)}\\ \hline\$ 13,000 \\ \hline \underline{(13,000)}\\ \hline\underline{{\$ \quad 0}}\\ \hline \end{array} \begin{array}{l|} \hline\text { Williams } \\ \hline\$ 16,000 \\ \hline\underline{(16,000) }\\ \hline \$ \quad 0 \\ \hline\underline{ \quad 0} \\ \hline \$\underline{\quad 0}\\ \hline \end{array} \end{array}" class="answers-bank-image d-inline" loading="lazy" >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.


-Develop a predistribution plan for this partnership,assuming $12,000 of liquidation expenses are expected to be paid. Beginning balancesAssumed $96,000 loss (Schedule A)SubtotalAssumed $32,500 loss (Schedule B)Total Hardin $96,000(48,000)‾$48,000(19,500)$28.500 Sutton $45,000(32,000)‾$13,000(13,000)‾$0‾ Williams $16,000(16,000)‾$00‾$0‾\begin{array}{c}\begin{array}{|l}\hline\\\hline \text {Beginning balances}\\ \hline\text {Assumed \( \$ 96,000 \) loss (Schedule A)}\\ \hline\text {Subtotal}\\\hline \text {Assumed \( \$ 32,500 \) loss (Schedule B)}\\ \hline\text {Total} \\\hline \end{array}\begin{array}{|c|}\hline \text { Hardin } \\\hline \$ 96,000 \\\hline \underline{(48,000)}\\\hline\$ 48,000 \\\hline(19,500) \\\hline \$ 28.500 \\\hline \end{array}\begin{array}{l|}\hline\text { Sutton } \\\hline \$ 45,000 \\\hline \underline{(32,000)}\\\hline\$ 13,000 \\\hline \underline{(13,000)}\\\hline\underline{{\$ \quad 0}}\\\hline \end{array}\begin{array}{l|}\hline\text { Williams } \\\hline\$ 16,000 \\\hline\underline{(16,000) }\\\hline \$ \quad 0 \\\hline\underline{ \quad 0} \\\hline \$\underline{\quad 0}\\\hline\end{array}\end{array}
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42
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:
 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.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.
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43
As of January 1,2011,the partnership of Canton,Yulls,and Garr had the following account balances and percentages for the sharing of profits and losses:

 Cash $80,000 Noncash assets 205,000 Liabilities 47,000 Canton, capital (30%)138,000 Yulls, capital (40%)119,500 Garr, capital (30%)(19,500)\begin{array} { | l | r | } \hline \text { Cash } & \$ 80,000 \\\hline \text { Noncash assets } & 205,000 \\\hline \text { Liabilities } & 47,000 \\\hline \text { Canton, capital } ( 30 \% ) & 138,000 \\\hline \text { Yulls, capital } ( 40 \% ) & 119,500 \\\hline \text { Garr, capital } ( 30 \% ) & ( 19,500 ) \\\hline\end{array}
The partnership incurred losses in recent years and decided to liquidate.The liquidation expenses were expected to be $10,000.

-How much of the existing cash balance could be distributed safely to partners at this time?
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44
On January 1,2011,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:

 Debit  Credit  Cash $23,400 Accounts Receivable 85,800 Inventory 67,600 Machinery and equipment, net 245,700 Won, loan 39,000‾ Accounts payable $68,900 Cadel, loan 26,000 Won, capital 153,400 Cadel, capital 117,000 Dax, capital 96,200 Totals $461,500$461,500\begin{array} { | l | r | r | } \hline & { \text { Debit } } & { \text { Credit } } \\\hline \text { Cash } & \$ 23,400 & \\\hline \text { Accounts Receivable } & 85,800 & \\\hline \text { Inventory } & 67,600 & \\\hline \text { Machinery and equipment, net } & 245,700 & \\\hline \text { Won, loan } & \underline { 39,000 } & \\\hline \text { Accounts payable } & & \$ 68,900 \\\hline \text { Cadel, loan } & & 26,000 \\\hline \text { Won, capital } & & 153,400 \\\hline \text { Cadel, capital } & & 117,000 \\\hline \text { Dax, capital } & & 96,200 \\\hline \text { Totals } & \$ 461,500 & \$ 461,500 \\\hline\end{array} 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:  January $66,300 was collected on the accounts receivable; the balance was deemed to  be uncollectible. $49,400 was received for the entire inventory. $2,600 in liquidation expenses were paid. $65,000 was paid to outside creditors, after receiving a $3,900 credit memo  from a creditor on January 11. Cash of $13,000 was retained at the end of the month to cover unrecorded  liabilities and anticipated expenses. The balance of cash was distributed to  the partners.  February $3,900 in liquidation expenses were paid. $7,800 in cash was retained at the end of the month to cover unrecorded  liabilities and anticipated expenses.  March $189,800 was received on the sale of all machinery and equipment. $6,500 in final liquidation expenses were paid.  No cash was retained as all cash was distributed to partners. \begin{array} { | l | l | } \hline \text { January } & \$ 66,300 \text { was collected on the accounts receivable; the balance was deemed to } \\\hline & \text { be uncollectible. } \\\hline & \$ 49,400 \text { was received for the entire inventory. } \\\hline & \$ 2,600 \text { in liquidation expenses were paid. } \\\hline & \$ 65,000 \text { was paid to outside creditors, after receiving a } \$ 3,900 \text { credit memo } \\\hline & \text { from a creditor on January } 11 . \\\hline & \text { Cash of } \$ 13,000 \text { was retained at the end of the month to cover unrecorded } \\\hline & \text { liabilities and anticipated expenses. The balance of cash was distributed to } \\\hline & \text { the partners. } \\\hline \text { February } & \$ 3,900 \text { in liquidation expenses were paid. } \\\hline & \$ 7,800 \text { in cash was retained at the end of the month to cover unrecorded } \\\hline & \text { liabilities and anticipated expenses. } \\\hline \text { March } & \$ 189,800 \text { was received on the sale of all machinery and equipment. } \\\hline & \$ 6,500 \text { in final liquidation expenses were paid. } \\\hline & \text { No cash was retained as all cash was distributed to partners. } \\\hline\end{array}

-Prepare a schedule to calculate the safe installment payments to be made to the partners at the end of February.
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45
What events or circumstances might force the termination of a partnership and liquidation of its assets?
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46
On January 1,2011,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:

 Debit  Credit  Cash $23,400 Accounts Receivable 85,800 Inventory 67,600 Machinery and equipment, net 245,700 Won, loan 39,000‾ Accounts payable $68,900 Cadel, loan 26,000 Won, capital 153,400 Cadel, capital 117,000 Dax, capital 96,200 Totals $461,500$461,500\begin{array} { | l | r | r | } \hline & { \text { Debit } } & { \text { Credit } } \\\hline \text { Cash } & \$ 23,400 & \\\hline \text { Accounts Receivable } & 85,800 & \\\hline \text { Inventory } & 67,600 & \\\hline \text { Machinery and equipment, net } & 245,700 & \\\hline \text { Won, loan } & \underline { 39,000 } & \\\hline \text { Accounts payable } & & \$ 68,900 \\\hline \text { Cadel, loan } & & 26,000 \\\hline \text { Won, capital } & & 153,400 \\\hline \text { Cadel, capital } & & 117,000 \\\hline \text { Dax, capital } & & 96,200 \\\hline \text { Totals } & \$ 461,500 & \$ 461,500 \\\hline\end{array} 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:  January $66,300 was collected on the accounts receivable; the balance was deemed to  be uncollectible. $49,400 was received for the entire inventory. $2,600 in liquidation expenses were paid. $65,000 was paid to outside creditors, after receiving a $3,900 credit memo  from a creditor on January 11. Cash of $13,000 was retained at the end of the month to cover unrecorded  liabilities and anticipated expenses. The balance of cash was distributed to  the partners.  February $3,900 in liquidation expenses were paid. $7,800 in cash was retained at the end of the month to cover unrecorded  liabilities and anticipated expenses.  March $189,800 was received on the sale of all machinery and equipment. $6,500 in final liquidation expenses were paid.  No cash was retained as all cash was distributed to partners. \begin{array} { | l | l | } \hline \text { January } & \$ 66,300 \text { was collected on the accounts receivable; the balance was deemed to } \\\hline & \text { be uncollectible. } \\\hline & \$ 49,400 \text { was received for the entire inventory. } \\\hline & \$ 2,600 \text { in liquidation expenses were paid. } \\\hline & \$ 65,000 \text { was paid to outside creditors, after receiving a } \$ 3,900 \text { credit memo } \\\hline & \text { from a creditor on January } 11 . \\\hline & \text { Cash of } \$ 13,000 \text { was retained at the end of the month to cover unrecorded } \\\hline & \text { liabilities and anticipated expenses. The balance of cash was distributed to } \\\hline & \text { the partners. } \\\hline \text { February } & \$ 3,900 \text { in liquidation expenses were paid. } \\\hline & \$ 7,800 \text { in cash was retained at the end of the month to cover unrecorded } \\\hline & \text { liabilities and anticipated expenses. } \\\hline \text { March } & \$ 189,800 \text { was received on the sale of all machinery and equipment. } \\\hline & \$ 6,500 \text { in final liquidation expenses were paid. } \\\hline & \text { No cash was retained as all cash was distributed to partners. } \\\hline\end{array}

-Prepare a schedule to calculate the safe payments to be made to the partners at the end of January.
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47
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?
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48
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?
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49
If the noncash assets are sold for $105,000,what would be the maximum amount of cash that Canton could expect to receive?
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50
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:
 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.   -Compute safe cash payments after the noncash assets have been sold and the liquidation expenses have been paid.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.
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51
What would be the maximum amount Garr might have to contribute to the partnership to eliminate a deficit balance in his account?
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52
Why is a Schedule of Liquidation prepared?
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53
On January 1,2011,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:

 Debit  Credit  Cash $23,400 Accounts Receivable 85,800 Inventory 67,600 Machinery and equipment, net 245,700 Won, loan 39,000‾ Accounts payable $68,900 Cadel, loan 26,000 Won, capital 153,400 Cadel, capital 117,000 Dax, capital 96,200 Totals $461,500$461,500\begin{array} { | l | r | r | } \hline & { \text { Debit } } & { \text { Credit } } \\\hline \text { Cash } & \$ 23,400 & \\\hline \text { Accounts Receivable } & 85,800 & \\\hline \text { Inventory } & 67,600 & \\\hline \text { Machinery and equipment, net } & 245,700 & \\\hline \text { Won, loan } & \underline { 39,000 } & \\\hline \text { Accounts payable } & & \$ 68,900 \\\hline \text { Cadel, loan } & & 26,000 \\\hline \text { Won, capital } & & 153,400 \\\hline \text { Cadel, capital } & & 117,000 \\\hline \text { Dax, capital } & & 96,200 \\\hline \text { Totals } & \$ 461,500 & \$ 461,500 \\\hline\end{array} 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:  January $66,300 was collected on the accounts receivable; the balance was deemed to  be uncollectible. $49,400 was received for the entire inventory. $2,600 in liquidation expenses were paid. $65,000 was paid to outside creditors, after receiving a $3,900 credit memo  from a creditor on January 11. Cash of $13,000 was retained at the end of the month to cover unrecorded  liabilities and anticipated expenses. The balance of cash was distributed to  the partners.  February $3,900 in liquidation expenses were paid. $7,800 in cash was retained at the end of the month to cover unrecorded  liabilities and anticipated expenses.  March $189,800 was received on the sale of all machinery and equipment. $6,500 in final liquidation expenses were paid.  No cash was retained as all cash was distributed to partners. \begin{array} { | l | l | } \hline \text { January } & \$ 66,300 \text { was collected on the accounts receivable; the balance was deemed to } \\\hline & \text { be uncollectible. } \\\hline & \$ 49,400 \text { was received for the entire inventory. } \\\hline & \$ 2,600 \text { in liquidation expenses were paid. } \\\hline & \$ 65,000 \text { was paid to outside creditors, after receiving a } \$ 3,900 \text { credit memo } \\\hline & \text { from a creditor on January } 11 . \\\hline & \text { Cash of } \$ 13,000 \text { was retained at the end of the month to cover unrecorded } \\\hline & \text { liabilities and anticipated expenses. The balance of cash was distributed to } \\\hline & \text { the partners. } \\\hline \text { February } & \$ 3,900 \text { in liquidation expenses were paid. } \\\hline & \$ 7,800 \text { in cash was retained at the end of the month to cover unrecorded } \\\hline & \text { liabilities and anticipated expenses. } \\\hline \text { March } & \$ 189,800 \text { was received on the sale of all machinery and equipment. } \\\hline & \$ 6,500 \text { in final liquidation expenses were paid. } \\\hline & \text { No cash was retained as all cash was distributed to partners. } \\\hline\end{array}

-Prepare a schedule to calculate the safe payments to be made to the partners at the end of March.
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54
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.
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55
What should occur when a solvent partner has a deficit balance?
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56
For a partnership,how should liquidation gains and losses be accounted for?
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57
What is a safe cash payment?
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58
As of January 1,2011,the partnership of Canton,Yulls,and Garr had the following account balances and percentages for the sharing of profits and losses:

 Cash $80,000 Noncash assets 205,000 Liabilities 47,000 Canton, capital (30%)138,000 Yulls, capital (40%)119,500 Garr, capital (30%)(19,500)\begin{array} { | l | r | } \hline \text { Cash } & \$ 80,000 \\\hline \text { Noncash assets } & 205,000 \\\hline \text { Liabilities } & 47,000 \\\hline \text { Canton, capital } ( 30 \% ) & 138,000 \\\hline \text { Yulls, capital } ( 40 \% ) & 119,500 \\\hline \text { Garr, capital } ( 30 \% ) & ( 19,500 ) \\\hline\end{array}
The partnership incurred losses in recent years and decided to liquidate.The liquidation expenses were expected to be $10,000.

-How much cash should each partner receive at this time,pursuant to a proposed schedule of liquidation?
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59
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.
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60
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.
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61
The partners of Donald,Chief & Berry LLP decided to liquidate on August 1,2011.The balance sheet of the partnership is as follows,with the profit and loss ratio of 25%,45%,and 30%,respectively.

\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad DONALD, CHIEF & BERRY LLP\text {DONALD, CHIEF \& BERRY LLP}
\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad Balance Sheet\text {Balance Sheet}
\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad August 1, 2011\text {August 1, 2011}

\quad \quad \quad \quad \quad \quad \quad \quad Assets\text {Assets} \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad Liabilities & Partners’ Capital\text {Liabilities \& Partners' Capital}
 Cash $60,000 Trade accounts payable $130,000 Loan receivable from Donald 40,000 Loan payable to Chief 60,000 Other assets 500,000 Donald, capital 140,000 Chief, capital 160,000 Berry, capital 110,000 Total $ $otal $600,000\begin{array}{lrlr}\text { Cash } & \$ 60,000 & \text { Trade accounts payable } & \$ 130,000 \\\text { Loan receivable from Donald } & 40,000 & \text { Loan payable to Chief } & 60,000 \\\text { Other assets } & 500,000 & \text { Donald, capital } & 140,000 \\& & \text { Chief, capital } & 160,000 \\& & \text { Berry, capital } & 110,000 \\\text { Total } & \$ \text { \$otal } & \$ 600,000\end{array} 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 1,2011,to record the offset of the loan receivable from Donald.
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62
The partners of Donald,Chief & Berry LLP decided to liquidate on August 1,2011.The balance sheet of the partnership is as follows,with the profit and loss ratio of 25%,45%,and 30%,respectively.

\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad DONALD, CHIEF & BERRY LLP\text {DONALD, CHIEF \& BERRY LLP}
\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad Balance Sheet\text {Balance Sheet}
\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad August 1, 2011\text {August 1, 2011}

\quad \quad \quad \quad \quad \quad \quad \quad Assets\text {Assets} \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad Liabilities & Partners’ Capital\text {Liabilities \& Partners' Capital}
 Cash $60,000 Trade accounts payable $130,000 Loan receivable from Donald 40,000 Loan payable to Chief 60,000 Other assets 500,000 Donald, capital 140,000 Chief, capital 160,000 Berry, capital 110,000 Total $ $otal $600,000\begin{array}{lrlr}\text { Cash } & \$ 60,000 & \text { Trade accounts payable } & \$ 130,000 \\\text { Loan receivable from Donald } & 40,000 & \text { Loan payable to Chief } & 60,000 \\\text { Other assets } & 500,000 & \text { Donald, capital } & 140,000 \\& & \text { Chief, capital } & 160,000 \\& & \text { Berry, capital } & 110,000 \\\text { Total } & \$ \text { \$otal } & \$ 600,000\end{array} 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 1,2011,to record the realization of Other assets.
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63
The partners of Donald,Chief & Berry LLP decided to liquidate on August 1,2011.The balance sheet of the partnership is as follows,with the profit and loss ratio of 25%,45%,and 30%,respectively.

\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad DONALD, CHIEF & BERRY LLP\text {DONALD, CHIEF \& BERRY LLP}
\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad Balance Sheet\text {Balance Sheet}
\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad August 1, 2011\text {August 1, 2011}

\quad \quad \quad \quad \quad \quad \quad \quad Assets\text {Assets} \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad Liabilities & Partners’ Capital\text {Liabilities \& Partners' Capital}
 Cash $60,000 Trade accounts payable $130,000 Loan receivable from Donald 40,000 Loan payable to Chief 60,000 Other assets 500,000 Donald, capital 140,000 Chief, capital 160,000 Berry, capital 110,000 Total $ $otal $600,000\begin{array}{lrlr}\text { Cash } & \$ 60,000 & \text { Trade accounts payable } & \$ 130,000 \\\text { Loan receivable from Donald } & 40,000 & \text { Loan payable to Chief } & 60,000 \\\text { Other assets } & 500,000 & \text { Donald, capital } & 140,000 \\& & \text { Chief, capital } & 160,000 \\& & \text { Berry, capital } & 110,000 \\\text { Total } & \$ \text { \$otal } & \$ 600,000\end{array} 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 1,2011,to record payment of liabilities.
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64
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\begin{array} { | l | r | } \hline \text { Cash } & \$ 40,000 \\\hline \text { Noncash assets } & 80,000 \\\hline \text { Liabilities } & 20,000 \\\hline \text { Loan Payable to Rogers } & 10,000 \\\hline \text { Rogers, Capital } & 35,000 \\\hline \text { Dennis, Capital } & 30,000 \\\hline \text { Berry, Capital } & 25,000 \\\hline\end{array}
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.
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65
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\begin{array} { | l | r | } \hline \text { Cash } & \$ 40,000 \\\hline \text { Noncash assets } & 80,000 \\\hline \text { Liabilities } & 20,000 \\\hline \text { Loan Payable to Rogers } & 10,000 \\\hline \text { Rogers, Capital } & 35,000 \\\hline \text { Dennis, Capital } & 30,000 \\\hline \text { Berry, Capital } & 25,000 \\\hline\end{array}
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.
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66
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\begin{array} { | l | r | } \hline \text { Cash } & \$ 40,000 \\\hline \text { Noncash assets } & 80,000 \\\hline \text { Liabilities } & 20,000 \\\hline \text { Loan Payable to Rogers } & 10,000 \\\hline \text { Rogers, Capital } & 35,000 \\\hline \text { Dennis, Capital } & 30,000 \\\hline \text { Berry, Capital } & 25,000 \\\hline\end{array}
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.
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67
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\begin{array} { | l | r | } \hline \text { Cash } & \$ 40,000 \\\hline \text { Noncash assets } & 80,000 \\\hline \text { Liabilities } & 20,000 \\\hline \text { Loan Payable to Rogers } & 10,000 \\\hline \text { Rogers, Capital } & 35,000 \\\hline \text { Dennis, Capital } & 30,000 \\\hline \text { Berry, Capital } & 25,000 \\\hline\end{array}
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.
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68
Prepare the schedule to compute the cash payments to the partners.
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