Question 1

The partnership of Stan, Kenney, and Cartman has been dissolved and is in the process of liquidation. On July 1, 2017, just before the second cash distribution, the assets and equities of the partnership along with residual profit sharing ratios were as follows:  Assume that the available cash is distributed immediately, except for a $10,000 contingency fund that is withheld pending complete liquidation of the partnership. How much cash should be paid to each of the partners?

Accepted Answer

The answer of The partnership of Stan, Kenney, and Cartman...

Question 2

Due to the fact that the partnership had been unprofitable for the past several years, A, B, C, and D decided to liquidate their partnership. The partners share profits and losses in the ratio of 40:30:20:10, respectively. The following balance sheet was prepared immediately before the liquidation process began:  The partnership's other assets are sold for $100,000 cash. The partnership operates in a state which has adopted the Uniform Partnership Act.
Required:
A. Complete the following schedule of partnership realization and liquidation. Assume that a partner makes additional contributions to the partnership when appropriate based on their individual status.  B. Complete the following schedule to show the total amount that will be paid to the personal creditors.

Accepted Answer

The answer of Due to the fact that the partnership...

Question 3

The Uniform Partnership Act specifies specific steps in distributing available partnership assets in liquidation. Describe the steps used to distribute partnership assets during the liquidation process.

Accepted Answer

The answer of The Uniform Partnership Act specifies specific steps...

Question 4

The partnership of Homer, Marge, and Bart share profits and losses in the ratio of 4:4:2, respectively. The partners voted to dissolve the partnership when its assets, liabilities, and capital were as follows:  The partnership will be liquidated over a prolonged period of time. As cash is available, it will be distributed to the partners. The first sale of noncash assets having a book value of $360,000 realized $285,000. How much cash should be distributed to each partner after this sale?

Accepted Answer

The answer of The partnership of Homer, Marge, and Bart...

Question 5

The NOR Partnership is being liquidated. A balance sheet prepared prior to liquidation is presented below:  Nutt, Ohm, and Rice share profits and losses in a 40:40:20 ratio. All partners are personally insolvent.
Required:
A. Prepare the journal entries necessary to record the distribution of the available cash.
B. Prepare the journal entries necessary to record the completion of the liquidation process, assuming the other assets are sold for $120,000.

Accepted Answer

The answer of The NOR Partnership is being liquidated. A...

Question 6

The trial balance for the ABC Partnership is as follows just before liquidation:  Partners share profits a 50:30:20 ratio.
Required:
Prepare an advance cash distribution plan showing how available cash would be distributed.

Accepted Answer

The answer of The trial balance for the ABC Partnership...

Question 7

An advance cash distribution plan specifies the order in which each partner will receive cash and the dollar amount each will receive as it becomes available for distribution. Identify the four steps in the preparation of an advance cash distribution plan.

Accepted Answer

The answer of An advance cash distribution plan specifies the...

Question 8

David, Paul, and Burt are partners in a CPA firm sharing profits and losses in a ratio of 2:2:3, respectively. Immediately prior to liquidation, the following balance sheet was prepared:

Required:
Assuming the noncash assets are sold for $160,000, determine the amount of cash to be distributed to each partner assuming all partners are personally solvent. Complete the worksheet and clearly indicate the amount of cash to be distributed to each partner in the spaces provided.

Accepted Answer

The answer of David, Paul, and Burt are partners in...

Question 9

David, Paul, and Burt are partners in a CPA firm sharing profits and losses in a ratio of 2:2:3, respectively. Immediately prior to liquidation, the following balance sheet was prepared:  Required:
Assuming the noncash assets are sold for $300,000, determine the amount of cash to be distributed to each partner. Complete the worksheet and clearly indicate the amount of cash to be distributed to each partner in the spaces provided. No cash is available from any of the three partners.

Accepted Answer

The answer of David, Paul, and Burt are partners in...

Question 10

The ABC partnership has the following capital accounts on its books at December 31, 2017:  All liabilities have been liquidated and the cash balance is zero. None of the partners have personal assets in excess of his personal liabilities. The partners share profits and losses in the ratio of 3:2:5. If the noncash assets are sold for $150,000, the partners should receive as a final payment:

Accepted Answer

The answer of The ABC partnership has the following capital...

Question 11

A trial balance for the DEF partnership just prior to liquidation is given below:  The partners share income and loss on the following basis:  Required:
Prepare an advance cash distribution plan for the partners.

Accepted Answer

The answer of A trial balance for the DEF partnership...

Question 12

A, B, and C have capital balances of $80,000, $80,000, and $40,000, respectively. Profits are allocated 40% to A, 40% to B and 20% to C. The partners have decided to dissolve and liquidate the partnership. After paying all creditors the amount available for distribution is $20,000. A, and B are personally solvent. C is personally insolvent. Under the circumstances, A and B will each:

Accepted Answer

The answer of A, B, and C have capital balances...

Question 13

The summarized balances of the accounts of RST partnership on December 31, 2017, are as follows:  The agreed upon profit/loss ratio is 50:40:10, respectively. Using the information given above, which one of the following amounts, if any, is the loss absorption potential of partner S as of December 31, 2017?

Accepted Answer

The answer of The summarized balances of the accounts of...

Question 14

The December 31, 2016, balance sheet of the Deng, Danielson, and Gibson partnership, along with the partners' residual profit and loss sharing ratios, is summarized as follows:  The partners agree to liquidate their partnership as soon as possible after January 1, 2017 and to distribute all cash as it becomes available.
Required:
Prepare an advance cash distribution plan to show how cash will be distributed as it becomes available.

Accepted Answer

The answer of The December 31, 2016, balance sheet of...

Question 15

Lennon, Newman, and Ott operate the LNO Partnership. The partnership agreement provides that the partners share profits in the ratio of 40:40:20, respectively. Unable to satisfy the firm's debts, the partners decide to liquidate. Account balances just prior to the start of the liquidation process are as follows:  During the first month of liquidation, other assets with a book value of $150,000 are sold for $165,000, and creditors are paid. In the following month unrecorded liabilities of $12,000 are discovered and assets carried on the books at a cost of $90,000 are sold for $36,000. During the third month the remaining other assets are sold for $42,000 and all available cash is distributed.
Required:
Prepare a schedule of partnership realization and liquidation. A safe distribution of cash is to be made at the end of the second and third months. The partners agreed to hold $30,000 in cash in reserve to provide for possible liquidation expenses and/or unrecorded liabilities. All of the partners are personally insolvent.

Accepted Answer

The answer of Lennon, Newman, and Ott operate the LNO...

Quiz 16: Partnerships: Formation, Operation, and Ownership Changes

The Uniform Partnership Act specifies specific steps in distributing available partnership assets in liquidation. Describe the steps used to distribute partnership assets during the liquidation process.

The trial balance for the ABC Partnership is as follows just before liquidation: Partners share profits a 50:30:20 ratio. Required: Prepare an advance cash distribution plan showing how available cash would be distributed.

An advance cash distribution plan specifies the order in which each partner will receive cash and the dollar amount each will receive as it becomes available for distribution. Identify the four steps in the preparation of an advance cash distribution plan.

A trial balance for the DEF partnership just prior to liquidation is given below: The partners share income and loss on the following basis: Required: Prepare an advance cash distribution plan for the partners.