Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Chapter 15, Problem 15P
To determine
Identify the amount of safe payment that can be made to each partner if a preliminary distribution of cash is to be made.
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The partnership of Peter, Paul and Mary share profits and losses in the ratio of 4:4:2 respectively. The partners voted to dissolve the partnership when its assets, liabilities and capital were as follows:
Cash …………………………. P 250,000
Non-cash assets………………. 1,000,000
Total assets …………………. P 1,250,000
Liabilities ……………………………………. P 200,000
Peter, Capital ………………………………… 300,000
Paul, Capital …………………………………. 350,000
Mary, Capital …..……………………………. 400,000
Total liabilities and capital ……………..… P 1,250,000
The partnership will be liquidated over a prolonged period of time. As cash is available, it will be distributed to the partners. The first sale of non-cash assets having a book value of P600,000 realized P475,000. How much cash should be distributed to each partner after this sale?
a. Peter – P90,000; Paul – P140,000; Mary – P 295,000
b. Peter – P210,000; Paul – P290,000; Mary – P 145,000
c. Peter – P290,000; Paul – P210,000; Mary – P 105,000
d. Peter – P150,000; Paul – P175,000; Mary – P…
A local partnership is liquidating and has only two assets (cash of $10,000 and land with a cost of $35,000). All partnership liabilities have been paid. All partners are personally insolvent. The partners have capital balances and share profits and losses as follows.
Brown, capital (40%) . . . . . . . $ 25,000Fish, capital (30%) . . . . . . . . . . 15,000Stone, capital (30%) . . . . . . . . . 5,000
a. If the land is sold for $25,000, how much cash does each partner receive in a final settlement?b. If the land is sold for $15,000, how much cash does each partner receive in a final settlement?c. If the land is sold for $5,000, how much cash does each partner receive in a final settlement?
A partnership currently holds three assets: cash, $10,000; land, $35,000; and a building, $50,000. The partnership has no liabilities. The partners anticipate that expenses required to liquidate their partnership will amount to $5,000. Capital balances are:
Ace, capital . . . . . . . . . . . . . . $ 25,000Ball, capital . . . . . . . . . . . . . .. . 28,000Eaton, capital . . . . . . . . . . . . . . 20,000Lake, capital . . . . . . . . . . . . . . . 22,000
The partners share profits and losses as follows: Ace (30 percent), Ball (30 percent), Eaton (20 percent), and Lake (20 percent). If a preliminary distribution of cash is to be made, what is the amount of safe payment that can be made to each partner?
Chapter 15 Solutions
Advanced Accounting
Ch. 15 - Prob. 1QCh. 15 - Prob. 2QCh. 15 - Prob. 3QCh. 15 - Prob. 4QCh. 15 - What is the purpose of a statement of liquidation?...Ch. 15 - Prob. 1PCh. 15 - Prob. 2PCh. 15 - Prob. 3PCh. 15 - Prob. 4PCh. 15 - A partnership is considering possible liquidation...
Ch. 15 - What is a predistribution plan? a. A list of the...Ch. 15 - Prob. 7PCh. 15 - Prob. 8PCh. 15 - Prob. 9PCh. 15 - Prob. 10PCh. 15 - Prob. 11PCh. 15 - Prob. 12PCh. 15 - Prob. 13PCh. 15 - Prob. 14PCh. 15 - Prob. 15PCh. 15 - Prob. 16PCh. 15 - Prob. 17PCh. 15 - Prob. 18PCh. 15 - Prob. 25PCh. 15 - Prob. 26PCh. 15 - March, April, and May have been in partnership for...Ch. 15 - Prob. 28PCh. 15 - Prob. 29P
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- The following balances is for a local partnership in which the partners have become very unhappy with each other. Cash . . . . . . . . . . . . . . . . . . . $ 40,000 Liabilities . . . . . . . . . . .. . . . . $ 30,000Land . . . . . . . . . . . . . . . . . . . 130,000 Adams, capital . . . . . . . . . . . 80,000Building . . . . . . . . . . . . . . . . 120,000 Baker, capital . . . . . . . . . . . . . . . . 30,000Carvil, capital . . . . . . . . . . . . . 60,000Dobbs, capital . . . . . . . . . . . . . 90,000 To avoid more conflict, the partners have decided to cease operations and sell all assets. Using this information, answer the following questions. Each question should be viewed as an independentsituation related to the partnership’s liquidation.a. The $10,000 cash that exceeds the partnership liabilities is to be disbursed immediately. If profits and losses are allocated to Adams, Baker, Carvil, and Dobbs on a 2:3:3:2 basis, respectively, how will the $10,000 be divided?b. The $10,000…arrow_forwardA partnership has assets of $210,000 and liabilities of $95,000. The capital information for the current partners is as follows: Partner A Partner B Partner CProfit and loss percentages . . . . . . . . . . . . 50% 30% 20%Capital balances . . . . . . . . . . . . . . . . . . . . $70,000 $30,000 $15,000Given the above information, respond to each of the following independent fact situations:1. Assuming new Partner D acquired 20% of Partner B’s interest from B for consideration of $15,000, what is Partner B’s capital balance after this transaction?2. Assume that the above assets are understated by $25,000. If new Partner D were to acquire a 30% interest in the partnership by making a contribution of assets to the partnership, what would be the suggested value of the consideration?3. If the above assets were overstated by $25,000, what amount of consideration should new Partner D convey to the…arrow_forwardA partnership has decided to liquidate its operations. Prior to beginning the liquidation process, the partnership had cash balances of $12,000 and noncash assets of $210,000. At that time liabilities were $125,000 of which $25,000 represented a note payable to Partner B. The capital information for the current partners is as follows: Partner A Partner B Partner CProfit and loss percentages . . . . . . . . . . . 50% 30% 20%Capital balances . . . . . . . . . . . . . . . . . . . .$75,000 $42,000 $(20,000)The following events occurred over the four-month liquidation period, and it was decided that all available cash would be distributed at the end of each month.Month 1—Payments of $35,000 were received on accounts receivable with a book value of $43,000, and the balance of those accounts were written off. A $12,000 allowance for uncollectible accounts was established against…arrow_forward
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