Ghu Lump-Sum LiquidationThree university students, Cho, Kenney, and Martinez, operated a successful business, renting furniture and appliances to students residing in dormitories and off-campus apartments. The three are nowgraduating and wish to sell the business before beginning their respective careers. They shared profits in a 7:5:4 ratio. The partnership's current balance sheet is as follows:Cash$60,00010,00027,00028,000Capital-KenneyCapital Martinez61,000Total assets$186,000 Total liabilities and capital $186,000Another student group, organized as a corporation, wants to buy the business. Their offer of $105,000 for the equipment and $12,000 for the receivables is accepted. After receipt of the $117,000, the liabilities arepaid and the partnership is liquidated.RequiredReceivablesLoan receivable-ChoRental equipment, net$6,000 Accounts payable25,000 Loan payable-Kenney15,000 | Capital—Cho140,000How much does each partner receive?Cash DistributionCho$Kenney $Martinez $000

First , we need to determine the cash earned by partners after realisation of assets and liabilities…

Answered: hree university students, Cho, Kenney,…

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter8: Property Transactions: Capital Gains And Losses, Section 1231 And Recapture Provisions

Section: Chapter Questions

Problem 18P

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Hillary Bruce and Cindy own a partnership firm. Hillary has an ownership interest of $24,000, Bruce has an ownership interest of $41,000, and Cindy has an ownership interest of $30,000. In the process of liquidation, the partnership sells non cash assets and registers a gain of $30,000. The profit loss sharing agreement is 1:2:3 respectively. Which of the following is TRUE when a journal entry for the allocation of gain is recorded? A) Hillary Capital is credited for $10,000. B) Cindy, Capital Is credited for $15,000 C) Hillary capital is debited for $10,000. D) Cindy Capital is credited for $ 10,000
Hannah Freeman and Hugo Hernandez form a partnership by combining assets of their former businesses. The following balance sheet information is provided by Freeman, sole proprietorship: Hannah Freeman Proprietorship Balance Sheet June 1, 20Y3 $ 65,000 Cash Accounts receivable $125,000 Less: Allowance for doubtful accounts 7,200 117,800 Land 215,000 $ 78,000 Equipment Less: Accumulated depreciation-equipment 41,000 37,000 Total assets $434,800 $ 24,800 Accounts payable Notes payable Hannah Freeman, capital 76,000 334,000 Total liabilities and owner's equity $434,800 Freeman obtained appraised values for the land and equipment as follows: Land $320,000 Equipment 34,800 An analysis of the accounts receivable indicated that the allowance for doubtful accounts should be increased to $9,500. Journalize the partnership's entry for Freeman's investment.
Lump-Sum Liquidation Three university students, Cho, Kenney, and Martinez, operated a successful business, renting furniture and appliances to students residing in dormitories and off-campus apartments. The three are now graduating and wish to sell the business before beginning their respective careers. They shared profits in a 7.5.4 ratio The partnership's current balance sheet is as follows: Cash $6,000 Accounts payable $60,000 10,000 25,000 Loan payable-Kenney 15,000 Capital—Cho 27,000 28,000 140,000 Capital-Kenney Capital-Martinez 61,000 Total assets $186,000 Total liabilities and capital $186,000 Another student group, organized as a corporation, wants to buy the business. Their offer of $105,000 for the equipment and $12,000 for the receivables is accepted. After receipt of the $117,000, the liabilities are paid and the partnership is liquidated. Required How much does each partner receive? Cash Distribution Cho $ 9,000 Kenney $ 23,000 Martinez $ 49,000 Receivables Loan…
Accounting Make it ASAP Lump-Sum Liquidation Three university students, Cho, Kenney, and Martinez, operated a successful business, renting furniture and appliances to students residing in dormitories and off-campus apartments. The three are now graduating and wish to sell the business before beginning their respective careers. They shared profits in a 2:1:1 ratio. The partnership’s current balance sheet is as follows: Cash $6,000 Accounts payable $60,000 Loan receivable—Cho 25,000 Loan payable—Kenney 10,000 Other assets 158,000 Capital—Cho 30,000 Capital—Kenney 30,000 Capital—Martinez 59,000 Total assets $189,000 Total liabilities and capital $189,000 Another student group, organized as an LLC, wants to buy the business. The LLC's offer of $117,000 for the partnership's other assets is accepted. After receipt of the $117,000, the liabilities are paid and the partnership is liquidated. Required How much does each partner receive? Assume that if one…
Harry, Tony, and Liza run a partnership firm and share in the profits 1:3:2, respectively. In the process of liquidation, the partnership sells non-cash assets, having a book value of $83,000, for $81,000. What would be the journal entry for distribution to partners for the loss on the sale of the non-cash assets? 81,000 3,000 O Cash Gain on Disposal Non-cash Assets Loss on Disposal O Loss on Disposal Harry, Capital Tony, Capital Liza, Capital O Harry, Capital Tony, Capital Liza, Capital Loss on Disposal O Cash Loss on Disposal Non-cash Assets 2,000 333 1,000 667 81,000 2,000 83,000 1,000 333 1,000 667 2,000 83,000
The notes payable amount for Trent and Dana’s company totaled $55,000, and the accounts payable totaled $59,000. The total sale of noncash assets realized a gain of $7,400. If the partnership pays in full, how much will their creditors be paid? 1.$120,600 2.$106,600 3.$66,400 4.$114,000
Items 34 and 35 are based on the following information: On January 2,2010, Jason and Melissa formed a partnership by contributing the following assets: Cash Accounts Receivable Merchandise Inventory Land Building Jason P ? 80,000 100,000 Melissa 34. On January 2, 2010, Melissa, Capital amounts to a. P440,000 b. P600,000 P 380,000 240,000 The Land invested by Melissa is subject to mortgage loan of P160,000, which is to be assumed by the partnership. The accounts receivable invested by Jayson are believed to be only 90% collectible. d. P1,040,000 35. Assuming that Jayson is to contribute enough cash to bring his capital equal to that of Melissa, required cash contribution of Jayson is a. P268,000 b. P420,000 d. P600,000 c. P760,000 c. P440,000
contribute any personal assets to cover it. Problem #13 Dreparation of Journal Entries for Partnership Liquidation Tugade, Masinsin and Biore are all famous athletes who have been operating a sports memorabilia store for many years. The partnership decided to liquidate its operation rather than sell the business because they are each about to retire and want to go their separate ways. They have been sharing profits in the ratio of 40% to Tugade, 40% to Masinsin, and 20% to Biore. The trial balance for their business on Jan. 1, 2019 follows: Trial Balance January 1, 2019 Cash P 42,000 Accounts Receivable 189,600 Allowance for Uncollectible Accounts P. 11,100 Merchandise Inventory 293,100 9,000 120,000 31,500 Prepaid Insurance Land Office Equipment Accu. Depreciation-Office Equipment Machinery Accu. Depreciation-Machinery Building Accu. Depreciation-Building Notes Payable Accounts Payable 10,500 81,600 32,100 375,000 112,500 120,000 220,500 240,000 Mortgage Payable Tugade, Capital…
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
The partnership of Hendrick, Mitchum, and Redding has the following account balances: Cash Noncash assets a Maximum amount b Distributed $ 51,000 136,000 This partnership is being liquidated. Hendrick and Mitchum are each entitled to 30 percent of all profits and losses with the remaining 40 percent going to Redding. Hendrick Mitchum Liabilities Hendrick, capital Mitchum, capital Redding, capital a. What is the maximum amount that Redding might have to contribute to this partnership because of the deficit capital balance? b. How should the $10,000 cash that is presently available in excess of liabilities be distributed? c. If the noncash assets are sold for a total of $51,000, what is the minimum amount of cash that Hendrick could receive? (Do not round intermediate calculations.) Redding C Minimum amount $ 41,000 91,000 71,000 (16,000)
Answer and explain Problem #2 Lester and Stephen formed a partnership with capital contributions of P300,000 and P700,000, respectively. During its first year of operations, the partnership suffered a loss of P50,000. Prepare a schedule showing the division of profit between the partners under each of the following independent assumptions: Loss is agreed to be divided equally. There is no profit or loss sharing agreement. A monthly salary of P8,000 will be given to Lester and the balance divided in the ratio of their capital balances. A monthly salary of P8,000 will be given to Lester, 6% interest will be allowed on the capital balances of each partner; and the balance divided equally.
The net equities and income-sharing ratio for the R, S, T U Partnership before liquidation were as follows: R S T U Net equity in partnership $36,000 $32,400 $8,000 $(100) Income-sharing ratio 3 4 2 1 A) Prepare a program showing how cash should be distributed if the liabilities are $15,000.B) Make the journal entry to distribute $90,000 cash.

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