FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:Alex and Bess have been in partnership for many years. The partners, who share profits and losses on a 60:40 basis, respectively.
wish to retire and have agreed to liquidate the business. Liquidation expenses are estimated to be $7,000. At the date the partnership
ceases operations, the balance sheet is as follows:
Cash
Noncash assets
Total assets
$ 66,000
250,000
$316,000
Liabilities
Alex, capital
Bess, capital
Total liabilities and capital
Part A: Prepare journal entries for the following transactions that occurred in chronological order.
a. Distributed safe cash payments to the partners.
b. Paid $28.800 of the partnership's liabilities.
c. Sold noncash assets for $268,000.
d. Distributed safe cash payments to the partners.
e. Paid remaining partnership liabilities of $19,200,
f. Paid $5,500 in liquidation expenses; no further expenses will be incurred.
g. Distributed remaining cash held by the business to the partners.
$ 48,000
150,000
118,000
$316,000
Part B: Prepare a final statement of partnership liquidation
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- The E.N.D. partnership has the following capital balances as of the end of the current year: $ 280,000 240,000 210,000 190,000 $ 920,000 Pineda Adams Fergie Gomez Total capital Answer each of the following independent questions: a. Assume that the partners share profits and losses 3:3:2:2, respectively. Fergie retires and is paid $262,000 based on the terms of the original partnership agreement. If the goodwill method is used, what is the capital balance of the remaining three partners? b. Assume that the partners share profits and losses 4:3:2:1, respectively. Pineda retires and is paid $305,000 based on the terms of the original partnership agreement. If the bonus method is used, what is the capital balance of the remaining three partners? (Do not round your intermediate calculations. Round your final answers to the nearest dollar amounts.) Capital Balance a. Pineda Adams Gomez b. Adams Fergie Gomezarrow_forwardAlex and Bess have been in partnership for many years. The partners, who share profits and losses on a 60:40 basis, respectively, wish to retire and have agreed to liquidate the business. Liquidation expenses are estimated to be $5,000. At the date the partnership ceases operations, the balance sheet is as follows: Cash Noncash assets Total assets Liabilities Alex, capital Bess, capital $ 200,000 Total liabilities and capital $ 50,000 150,000 Part A: Prepare journal entries for the following transactions that occurred in chronological order: a. Distributed safe cash payments to the partners. b. Paid $30,000 of the partnership's liabilities. c. Sold noncash assets for $160,000. d. Distributed safe cash payments to the partners. e. Paid remaining partnership liabilities of $10,000. f. Paid $4,000 in liquidation expenses; no further expenses will be incurred. g. Distributed remaining cash held by the business to the partners. $ 40,000 90,000 70,000 $ 200,000 Part B: Prepare a final…arrow_forwardThe 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 Included in Perry’s Capital account balance is a $20,000 partnership loan owed to Perry. Perry, Quincy, and Renquist shared profits and losses in a ratio of 2:4:4. Liquidation expenses were expected to be $15,000. All partners were insolvent. For what amount would the noncash assets need to be sold in order for Quincy to receive some cash from the liquidation? Multiple Choice 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.arrow_forward
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