The partners in Blossom Company decide to liquidate the firm when the balance sheet shows the following.Blossom CompanyBalance SheetMay 31, 2027AssetsLiabilities and Owners' EquityCash$28,000Notes payable$13,000Accounts receivable24,000Accounts payable26,500Allowance for doubtful accounts(1,000) Salaries and wages payable3,500Inventory34,000A. Jamison, capital32,000Equipment20,000S. Moyer, capital22,750Accumulated depreciation-equipment(5,000 )P. Roper, capital2,250$100,000$100,000The partners share income and loss 5:3:2. During the process of liquidation, the following transactions were complete1.A total of $54,750 was received from converting noncash assets into cash.2.Gain or loss on realization was allocated to partners.3.Liabilities were paid in full.4.P. Roper paid his capital deficiency.5.Cash was paid to the partners with credit balances.(a)Prepare the entries to record the transactions. (Credit account titles are automatically indented when amount is entered.

Step 1:Journal Entries:TransactionsAccount title and explanationDebitCredit1Cash$54,750 Allowance…

Answered: The partners in Blossom Company decide…

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter24: Bankruptcy, Reorganization, And Liquidation

Section: Chapter Questions

Problem 1P: Southwestern Wear Inc. has the following balance sheet: The trustees costs total 281,250, and the...

See similar textbooks

Similar questions

The partners in Crawford Company decide to liquidate the firm when the balance sheet shows the following. Crawford Company Balance Sheet May 31, 2020Assets Liabilities and Owners' EquityCash $ 27,500 Notes payable $ 13,500Accounts receivable 25,000 Accounts payable 27,000Allowance for doubtful accounts (1,000) Salaries and wages payable 4,000Inventory 34,500 A. Jamison, capital 30,000Equipment 21,000 S. Moyer,…
mcdonalds. is shutting down business and liquidating. The balances below will be used for the liquidation. john and brad share profits and losses equally. Cash $3,000 Notes Payable $7,500 vehicle 30,000 Less: Accumulated Depreciation 15,000 Bert, Capital 9,000 Ernie, Capital 1,500 Total Assets $18,000 Total Liabilities and Partner's equity $18,000 Sesame Street Co. Balance Sheet December 31, 2020 Assets Liabilities Partners' Equity The vehicle has been sold for $10,500 cash and neither partner has sufficient assets to pay any capital deficits. REQUIRED: Prepare the journal entries for the sale of the vehicle and the distribution of the cash to the proper parties on January 1, 2021 below.
The following are balances of a partnership between Shoe and Lace as at 2021 December 31: DR CR Capital on 2021 January 01: S S Shoe 30 000 Lace 30 000 Current Accounts on 2021 January 01: Shoe 1 500 Lace Drawings during the year were: Shoe Lace Land and building Equipment Cash at bank Bank loan 90 000 Electricity Office salaries Advertising Bad debts Provision for bad debts 700 Debtors Creditors 9 500 Provision for depreciation: Equipment 2 000 Stock on 2021 December 31 Gross profit for the year 150 000 Additional information: i. Provision for bad debts is to be increased by $50. ii. Amount for advertising included payment of $120 for 2022. iii. Electricity bill of $145 is due. iv. Equipment is to be depreciated at 20% per annum. v. Interest on capital is allowed at 20% per annum. vi. Interest on drawings is 5% per annum. vii. Profits and losses are to be shared between Shoe and Lace in the ratio 2:3. A. Prepare Profit and Loss and Appropriation Account for year ended 2021 December…
The partnership of Kylie, Bamboo and Tank is being liquidated. The summarized balance sheet below depicts their financial position before liquidation: Cash Loans to Tank Other non-cash assets P 30,000 70,000 600,000 The other non-cash assets were sold at P400,000. 1. The excess cash distributed to Kylie is P40,000 A. True B. False Accounts payables P Kylie, loan Kylie, capital (40%) Bambo, capital (20%) Tank, capital (40%) 2. The excess cash distributed to Tank is P110,000 A. True B. False 3. The ending balance of non-cash assets after liquidation is P200,000 A. True B. False 280,000 30,000 90,000 150,000 150,000
Southwestern Wear Inc. has the following balance sheet: The trustees costs total 281,250, and the firm has no accrued taxes or wages. The debentures are subordinated only to the notes payable. If the firm goes bankrupt and liquidates, how much will each class of investors receive if a total of 2.5 million is received from sale of the assets?
The statement of financial position of PRUTZ Partnership as of December 31, 2017 show the following balances before they decided to liquidate Cash P 4,200; Receivable from Kahel P5,000; Other Assets P200,000; Liabilities P 75,000; Apol, Capital P60,000; Kahel, Capital P50,000; Santol, Capital P24,200. Profit and Loss ratio were divided in the ratio 30%, 30% and 40% to Apol, Kahel and Santol respectively. The Other Assets were sold in 4 equal installment with gain (loss) on realization amounting to (P14,000), P0, (P47,000) and P45,000 respectively during the months of January, February, March and April 2018. For the first installment-sale of the other assets, the cash available distributed to the partners the book value of the assets sold per instalment amounted to: for the 3rd instalment-sale of the assets, the other assets were sold for: capital interest of Kahel amounted to: loss absorption capacity of Kahel amounted to final distribution of Cash available Apol…
PROBLEM SOLVING: The following balances were taken from the book of TIWALA-LANG Partnership as of July 1, 2018 when the partnership decided to liquidate: P 20,000 60,000 90,000 185,500 10,000 15,500 3,000 122,000 130,000 40,000 35,000 Cash Accounts Receivable Furniture & Fixtures Equipment Accounts Payable Notes Payable Payable, Lang TIng, Capital WAng, Capital LAy-at, Capital Lang, Capital Profit and loss ratio is 2:2:3:3, respectively, Cash is distributed to partners as it becomes available. Non-cash assets were sold for P200,000 during the liquidation process with liquidation cost amounting to P3,000. Assume that TIng and WAng are solvent and LAY-at and LAng are insolvent. REQUIRED: Prepare the following: A. STATEMENT OF LIQUIDATION B. Corresponding JOURNAL ENTRIES
Partners Ong, Rodriguez, Pamittan and Reyes who share profits andlosses at 30%, 30%, 20% and 20%, respectively, decided to liquidate. Allpartnership assets are to be converted into cash. Before liquidation, thecondensed statement of financial position follows:Cash P100, 000 Liabilities P750, 000Other Assets 1, 800, 000 Rodriguez, Loan 60, 000Reyes, Loan 50, 000Ong, Capital 420, 000Rodriguez, Capital 315, 000Pamittan, Capital 205, 000Reyes, Capital 100, 000Total P1, 900,000P1, 900,000The non-cash assets realized P800, 000, resulting to a loss of P1, 000,000. All the partners are solvent, and can contribute any additional cash tocover any deficiency. In the process of liquidation, deficiencies will occur andwill require additional investment as follows:a. Pamittan at P7, 500b. Reyes at P50, 000c. Reyes and Pamittan for P50, 000 and P7, 500, respectivelyd. None
Problem1. Assume the following data for ABC Partnership had the following condensed balance sheet just before the liquidation on November 1, 2020: Assets Liabilities and Capital P 24,000 P 12,000 Cash Liabilities Non-cash assets 84,000 A, Loans A, Capital (30%) 2,400 9,600 B, Capital (50%) 48,000 36.000 C. Capital (20%) Total P108,000 P108.000 Liquidation expenses paid amounted to P1,000. Required: Compute for the total payment for each partner (including loans) using different assumptions: 1. Non-cash assets were realized at P 96,000. 2. Non-cash assets were realized at P36,000. The personal assets and liabilities of the partners on this date are as follows: Personal assets Personal liabilities A P288,000 216,000 108,000 P240,000 228,000 108,000 В
Q3 X, Y and Z were partners sharing profits in the proportion of 3:2:1. Y Retires from the business. The Balance sheet of the firm on the date of retirement was as follows Liabilities Creditors Bills Payable General Reserve Capital Accounts X Y Z Amount (RO) 60,000 30,000 Stock 45,000 Debtors LESS Provision 120,000 RO 1500 90,000 Vehicle 60,000 405,000 Assets Cash at Bank Machinery It was agreed among the partners Goodwill of the firm to be valued at Provision for Doubtful debts to be increased by Outstanding expenses to be brought into account Vehicle is to be depreciated by Stock is to be depreciated by Machinery is to be appreciated by Amount (RO 15,000 45,000 60,000 75,000 210,000 405,000 72,000 3,000 5,700 17.5% 12.5% 7.5% Record the necessary Journal Entries and Prepare the necessary accounts and New Balance sheet of X and Z.
Q3 X, Y and Z were partners sharing profits in the proportion of 3:2:1. Y Retires from the business. The Balance sheet of the firm on the date of retirement was as follows Liabilities Creditors Bills Payable General Reserve Capital Accounts X Y Z Amount (RO) 120,000 Cash at Bank 60,000 Stock 90,000 Debtors LESS Provision Assets 240,000 RO 3000 180,000 Vehicle 120,000 Machinery 810,000 It was agreed among the partners Goodwill of the firm to be valued at Provision for Doubtful debts to be increased by Outstanding expenses to be brought into account Vehicle is to be depreciated by Stock is to be depreciated by Machinery is to be appreciated by Amount (RO) 30,000 90,000 120,000 150,000 420,000 810,000 144,000 6,000 11,400 17.5% 12.5% 7.5% Record the necessary Journal Entries and Prepare the necessary accounts and New Balance sheet of X and Z.
The partners of Sandhill Company have decided to liquidate their business. Noncash assets were sold for $122,840. The income ratios of the partners Cisneros, Gunselman, and Forren are 3 : 2 : 3, respectively. Complete the following schedule of cash payments for Sandhill Company. (If an amount reduces the account balance then enter with a negative sign preceding the number e.g. -15,000 or parenthesis e.g. (15,000).) Item Cash + Noncash Assets = Liabilities + Cisneros Capital + Gunselman Capital + Forren Capital Balance before liquidation $15,600 $88,600 $37,700 $16,800 $35,400 $14,300 Sale of noncash assets and allocation of gain New balances Pay liabilities New Balances Cash distribution to partners…

SEE MORE QUESTIONS

Recommended textbooks for you

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

SEE MORE TEXTBOOKS