Concept explainers
Liquidation of
To choose:The correct answer to determine how the available cash is distributed after paying accounts payable.
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Advanced Financial Accounting
- A. Cara. Fatima and Zabra are sharing income and loss in a 1.2.2 ratio respectively and decided to d their partnership Prine to the final distribution of cash to the partners, Sarah (60,000), Fatima has capital balance of $94, 000, and Zahra has capital balance of $106,000. the cash balance is $200,000. Required: Prepare journal entries to record the above liquidation process When: Sara is able to pay the amount she owes to the partnership. B. Batool plans to withdraw from "BRF Partnership". The recorded balance of Batool's capital account is $60,000. The remaining partners, Reem and Afrah, agreed to pay Batool cash of $58,000. The partners share income and loss equally. Required Prepare the journal entry to record the above withdrawal transaction.arrow_forwardThe following condensed balance sheet is for the partnership of Hardwick, Saunders, and Ferris, who share profits and losses in the ratio of 4:3:3, respectively: The partners decide to liquidate the partnership. Forty percent of the other assets are sold for $200,000. Prepare a proposed schedule of liquidation at this point in time.arrow_forwardWhat amount must the remaining assets be sold in order for Julia to receive P197,500 after liquidation? * Gerald, Julia and Bea are partners who decided to terminate their partnership due to misunderstanding. Total assets of the partnership is P480,000 including cash of P30,000. Capital balances of the partners were as follows Gerald P150,000; Julia P175,000; Bea P67,500. Unpaid liabilities amounted to P87,500. Assets with a book value of P175,000 were sold for P125,000 and the cash was distributed. The P/L ratio is 5:3:2arrow_forward
- After Non-Cash Assets have been sold and liabilities paid, the final step in the liquidation process is to distribute the balance of Cash to the partners. Consider the following: Cash $20 A, Capital Balance $8 B, Capital Balance $12 Gains and losses are shared equally between the partners. Which of the following is correct? Group of answer choice a.B would receive$12 as the final payment of cash. b. B would receive $10 as the final payment of cash. c. B would receive $8 as the final payment of cash. d. B would receive $20 as the final payment of cash.arrow_forwardUse the following information for the next five questions: The partners Athena, Aphrodite, and Hera who shared profit and losses in the ratio of 4:2:2 has decided to dissolve and liquidate their partnership. In the process of liquidation, their non-cash assets of P490,000 was realized at a loss of P340,000. However, they were able to pay their obligations to outside creditors of P105,000. The partner’s equity balance before the start of the liquidation has totaled to P450,000 to P450,000, broken down as follows: (Tip: Prepare a liquidation statement to answer the proceeding questions. Make sure that A=L+PE) Athena -P180,000 Aphrodite - 150,000 Hera - 120,000 10. At what amount were the non-cash assets realized? a. 150,000 c. 200,000 b. 175,000 d. 225,000 11. How much was the cash balance at the beginning of the liquidation process? a. 60,000 c. 70,000 b. 65,000 d. 75,000 12. How much is the cash balance of the company after paying its obligation? a. 320,000 c. 110,000 b. 90,000…arrow_forwardThe ETO Partnership is in the process of liquidation. The account balances prior to liquidation are given below: Debits Credits P 72,000 10,000 15,000 20,000 21,000 Cash Liabilities P 40,000 Aurora, drawing Esteban, drawing Tyro, drawing Operating loss Esteban, loan Tyro, loan Aurora, capital Esteban, capital Tyro, capital 8,000 25,000 49,000 18,000 Loss on realization 12,000 10,000 The partners share profits in the following ratio: Aurora, 1/6; Esteban, 2/6; and Tyro, 3/6. Upon liquidation of the partnership, Aurora should have received:arrow_forward
- Dona, Ella and Frey are partners in DEF Partnership with profit or loss sharing ratio of 6:1:3. Due to disagreement, the partners decided to liquidate their business with pre-liquidation statement of financial position presented below. What is the net proceeds from the sale of all noncash assets?arrow_forwardPrior to liquidating their partnership, Craig and Jenny had capital accounts of $65,450 and $129,570, respectively. The partnership assets were sold for $232,650. The partnership had $22,410 of liabilities. Craig and Jenny share income and losses equally. Determine the amount received by Jenny as a final distribution from liquidation of the partnership.$fill in the blankarrow_forwardThe partnership of Larson, Norris, Spencer, and Harrison has decided to terminate operations and liquidate all business property. During this process, the partners expect to incur $8,000 in liquidation expenses. All partners are currently solvent. The balance sheet reported by this partnership at the time that the liquidation commenced follows. The percentages indicate the allocation of profits and losses to each of the four partners. Based on the information provided, prepare a predistribution plan for liquidating this partnership.arrow_forward
- Following is a series of independent cases. In each situation, indicate the cash distribution to be made to partners at the end of the liquidation process. Unless otherwise stated, assume that all solvent partners will reimburse the partnership for their deficit capital balances.Part AThe Buarque, Monte, and Vinicius partnership reports the following accounts. Vinicius is personally insolvent and can contribute only an additional $9,000 to the partnership. Cash . . . . . . . . . . . . . . . . .. . $ 130,000Liabilities . . . . . . . . . . . . . .. . . 35,000Monte, loan . . . . . . . . . . . . . . . 20,000Buarque, capital (50% of profits and losses) . . . . . . . . . . . . . . 50,000Monte, capital (25%) . . . . . 40,000Vinicius, capital (25%) . . . . . . . . . . . . . . . . . . . . . . . . . (15,000) (deficit) Part BDrawdy, Langston, and Pearl operate a local accounting firm as a partnership. After working together for several years, they have decided to liquidate the partnership’s…arrow_forwardThree partners decided to liquidate their partnership. In accordance with their 3:2:1 income ratio, during step 2 of the process, partner 1 was allocated $7,500, partner 2 was allocated $5,000, and partner 3 was allocated $2,500. The total cash assets for the company at the time of liquidation totaled $9,000. How much was the gain during step 1 of the liquidation process? 1.$9,000 2.$15,000 3.$6,000 4.$24,000arrow_forwardPrior to liquidating their partnership, Fowler and Brooks had capital accounts of $32,000 and $57,000, respectively. Prior to liquidation, the partnership had no cash assets other than what was realized from the sale of assets. These partnership assets were sold for $86,000. The partnership had $4,000 of liabilities. Fowler and Brooks share income and losses equally. Determine the amount received by Fowler as a final distribution from liquidation of the partnership.arrow_forward