FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Prior to liquidating their
Determine the amount received by Jenny as a final distribution from liquidation of the partnership.
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Step 1: Introduction
Liquidation is the process of winding up the company by selling all the assets to generate funds to pay off the outstanding liabilities. The partners distribute the money derived from sale of assets if any assets are left after settlement of the liabilities and the partners are asked to get more capital if assets aren't enough to settle the dues.
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- The E.N.D. partnership has the following capital balances as of the end of the current year: 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 $270,000 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 $350,000 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.) a. Pineda Adams $ 300,000 260,000 230,000 210,000 $1,000,000 Gomez b. Adams Fergie Gomez Capital Balancearrow_forwardPrior to liquidating their partnership, Sam and Brian had capital accounts of $60,000 and $240,000, respectively. The partnership assets were sold for $120,000. The partnership had no liabilities. Sam and Brian share income and losses equally Determine the amount of Sam’s deficiency. Determine the amount distributed to Brian, assuming Sam is unable to satisfy the deficiency. Show your work:arrow_forwardHewitt and Patel are partners, sharing gains and losses equally. They decide to terminate their partnership. Prior to realization, their capital balances are $28,000 and $18,000, respectively. After all noncash assets are sold and all Iliabilities are paid, there is a cash balance of $35,000.arrow_forward
- (J) The partnership agreement for Wilson, Pickett & Nelson, a general partnership, provided that profits or losses be shared between the partners in the ratio of their financial contributions to the partnership. Wilson contributed $65,000, Pickett contributed $39,000 and Nelson contributed $13,000. In the partnership's first year of operation, it incurred a loss of $184,500. What amount of the partnership's loss is allocated to Nelson? Multiple Choice : $46,125 $92,250 $61,500 $20,500 $0arrow_forwarder to liquidating their partnership, Craig and Jenny had capital accounts of $77,260 and $108 23,230. The partnership had $22,940 of liabilities. Craig and Jenny share income and losses termine the amount received by Jenny as a final distribution from liquidation of the partnersharrow_forwardMyles Etter and Crystal Santori are partners who share in the income equally and have capital balances of $199,800 and $62,680, respectively. Etter, with the consent of Santori, sells one-third of his interest to Lonnie Davis. Assume the sale occurs on December 31. What entry is required by the partnership if the sales price is (a) $66,600? (b) $87,700?arrow_forward
- Required information Use the following information for the Exercises below. [The following information applies to the questions displayed below.) Turner, Roth, and Lowe are partners who share income and loss in a 2:3:5 ratio (in percents: Turner, 20%; Roth, 30%; and Lowe, 50% ). The partners decide to liquidate the partnership. Immediately before liquidation, the partnership balance sheet shows total assets, $138,000; total liabilities, $88,000; Turner, Capital, $3,500; Roth, Capital, $14,500; and Lowe, Capital, $32,000. Cash received from selling the assets was sufficient to repay all but $33,000 to the creditors. Exercise 12-14 Liquidation of limited partnership LO P5 Assume that the Turner, Roth, and Lowe partnership is a limited partnership. Turner and Roth are general partners and Lowe is a limited partner. How much should each partner contribute to cover the remaining capital deficiency of $33,000? (Do not round intermediate calculations. Losses and deficits amounts to be…arrow_forwardAfter the tangible assets have been adjusted to current market prices, the capital accounts of Grayson Jackson and Harry Barge have balances of $64,900 and $86,500, respectively. Lewan Gorman is to be admitted to the partnership, contributing $43,300 cash to the partnership, for which he is to receive an ownership equity of $50,500. All partners share equally in income. a. Journalize the entry to record the admission of Gorman, who is to receive a bonus of $7,200. If an amount box does not require an entry, leave it blank. Cash Grayson Jackson, Capital Harry Barge, Capital Lewan Gorman, Capital b. What are the capital balances of each partner after the admission of the new partner? Partner Balance Grayson Jackson $ Harry Barge $ Lewan Gorman $arrow_forwardThe partnership of Magda and Sue shares profits and losses in a 50:50 ratio after Mary receives a $7,000 salary and Sue receives a $6,500 salary. Prepare a schedule showing how the profit and loss should be divided, assuming the profit or loss for the year is: A $10,000 C. ($12,000)arrow_forward
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