Required: 4. Problem 4 - How much cash will go to the first rank creditors? 5. Problem 4 - How much cash will be given to Jody upon liquidation? 6. Problem 4 - How much cash will be given to Kane upon liquidation? 7. Problem 4 - How much cash will be given to Lark upon liquidation?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Exercise 4
The balance sheet of the Jody, Kane, and Lark partnership on May 1, 2016 (before
commencement of partnership liquidation) was as follows:
54,000
60,000
10,000
16,000
110,000
Accounts payable
Notes payable
Jody, capital (30%)
Kane, capital (45%)
Lark, capital (25%)
Cash
P
Inventory
Loan to Jody
Loan to Lark
28,000
60,000
32,000
90,000
40,000
Plant assets-net
Total assets
250,000 Total liab./equity
250,000
Liquidation events in May were as follows:
- The inventory was sold for P6,000 below book value;
- Plant assets with a book value of P50,000 were sold for P60,000.
Other assumptions:
All non-cash assets left unsold would be considered as a contingent loss of the
partnership and should be deducted from the capital accounts of the partners
according to their profit or loss sharing ratio.
• No additional cash contribution from a partner with a deficit balance. A partner's deficit
balance will be absorbed by the other partners based on their profit or loss sharing
ratio
• Partner's right to offset is allowed.
Required:
4. Problem 4 - How much cash will go to the first rank creditors?
5. Problem 4 - How much cash will be given to Jody upon liquidation?
6. Problem 4 - How much cash will be given to Kane upon liquidation?
7. Problem 4 - How much cash will be given to Lark upon liquidation?
Transcribed Image Text:Exercise 4 The balance sheet of the Jody, Kane, and Lark partnership on May 1, 2016 (before commencement of partnership liquidation) was as follows: 54,000 60,000 10,000 16,000 110,000 Accounts payable Notes payable Jody, capital (30%) Kane, capital (45%) Lark, capital (25%) Cash P Inventory Loan to Jody Loan to Lark 28,000 60,000 32,000 90,000 40,000 Plant assets-net Total assets 250,000 Total liab./equity 250,000 Liquidation events in May were as follows: - The inventory was sold for P6,000 below book value; - Plant assets with a book value of P50,000 were sold for P60,000. Other assumptions: All non-cash assets left unsold would be considered as a contingent loss of the partnership and should be deducted from the capital accounts of the partners according to their profit or loss sharing ratio. • No additional cash contribution from a partner with a deficit balance. A partner's deficit balance will be absorbed by the other partners based on their profit or loss sharing ratio • Partner's right to offset is allowed. Required: 4. Problem 4 - How much cash will go to the first rank creditors? 5. Problem 4 - How much cash will be given to Jody upon liquidation? 6. Problem 4 - How much cash will be given to Kane upon liquidation? 7. Problem 4 - How much cash will be given to Lark upon liquidation?
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