Advanced Financial Accounting
11th Edition
ISBN: 9780078025877
Author: Theodore E. Christensen, David M Cottrell, Cassy JH Budd Advanced Financial Accounting
Publisher: McGraw-Hill Education
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Chapter 16, Problem 16.15P
To determine
Installment liquidation: takes place for several months to complete, and periodic or installment payments are made to the partners during the liquidation period because they require funds for personal purposes. Most
Instalment liquidations involve a distribution of cash to partners before complete liquidation of assets occurs, they are two methods for ensuring fairness and equality in making cash distributions (1) safe payment schedule and (2) cash distribution plan.
Cash distribution plan involves ranking partners in terms of their vulnerability to possible losses, it is done by preparing a schedule of assumed loss absorption
the cash distribution plan for June 30, 20X1.
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The Pen, Evan, and Torves Partnership has asked you to assist in winding-up its business affairs. You compile the following information:
1. The partnership's trial balance on June 30, 20X1, is
Cash
Accounts Receivable (net)
Inventory
Plant and Equipment (net)
Accounts Payable
Pen, Capital
Evan, Capital
Torven, Capital
Total
Debit
$ 7,200
38,000
27,000
98,400
Profit and loss percentages
Preliquidation capital balances
$170,600
2. The partners share profits and losses as follows: Pen, 50 percent; Evan, 25 percent; and Torves, 25 percent.
3. The partners are considering an offer of $112,000 for the firm's accounts receivable, inventory, and plant and equipment as of June
30. The $112,000 will be paid to creditors and the partners in installments, the number and amounts of which are to be negotiated.
Decrease LAPs to next highest
Credit
Required:
Prepare a cash distribution plan as of June 30, 20X1, showing how much cash each partner will receive if the partners accept the offer
to sell…
Problem 1: On January 1, 20x1, Rody and Noy formed a partnership. Rody and Noy contributed the following assets at formation:
Rody
Noy
Cash
25,000
37,500
Inventory
18,750
Building
50,000
Equipment
18,750
The building is subject to a P12,500 mortgage, which was assumed by the partnership. They share profit and loss in the ratio of 60:40.
Assuming Rody will invest (withdraw) cash so that his capital balance will equal to his profit and loss ratio, what is the total asset of the partnership after formation?
(The correct answer is 246,875 but I need a solution/explanation)
EXERCISE 4. Journal Entries - Cash, non-cash, and industry contributions. Prepare and upload the journal entries
to record contributions of Kim and Krislam into the partnership under the following independent assumptions:
1. Cash contribution amounting to $45,000 each.
2. Kim contributed $35,000 cash and a store equipment with carrying value of $27,000. Krislam contributed
$15,000 cash and a delivery vehicle with a fair market value of $195,000. Kim and Krislam agreed that each
depreciable asset is overvalued by $4,000.
3. Kim contributed $10,000 cash and furniture and fixtures with carrying value of $32,000. Krislam contributed
$5,000 cash and a building with a fair market value of $295,000 and an unpaid mortgage of $27,500. Kim
and Krislam agreed that building is undervalued by $9,000.
4. Kim contributed $25,000 cash, a store equipment with fair market value of $47,000, and delivery vehicle with
a fair market value of $175,000. Krislam, an industrial partner, was to contribute her…
Chapter 16 Solutions
Advanced Financial Accounting
Ch. 16 - What are the major causes of a dissolution? What...Ch. 16 - Prob. 16.2QCh. 16 - Prob. 16.3QCh. 16 - Prob. 16.4QCh. 16 - Contrast a lump-sum liquidation with an...Ch. 16 - Prob. 16.6QCh. 16 - Prob. 16.7QCh. 16 - Prob. 16.8QCh. 16 - Prob. 16.9QCh. 16 - Prob. 16.10Q
Ch. 16 - Prob. 16.11QCh. 16 - The installment liquidation process uses a...Ch. 16 - Prob. 16.13QCh. 16 - Prob. 16.14QCh. 16 - Prob. 16.15QCh. 16 - Cash Distributions to Partners Analysis The...Ch. 16 - Prob. 16.2CCh. 16 - Prob. 16.3CCh. 16 - Sharing Losses during Liquidation Research Hiller,...Ch. 16 - Prob. 16.1.1ECh. 16 - Prob. 16.1.2ECh. 16 - Prob. 16.1.3ECh. 16 - Prob. 16.1.4ECh. 16 - Prob. 16.1.5ECh. 16 - Prob. 16.1.6ECh. 16 - Prob. 16.1.7ECh. 16 - Prob. 16.2.1ECh. 16 - Prob. 16.2.2ECh. 16 - Prob. 16.2.3ECh. 16 - Prob. 16.2.4ECh. 16 - Prob. 16.2.5ECh. 16 - Prob. 16.2.6ECh. 16 - Prob. 16.3ECh. 16 - Prob. 16.4ECh. 16 - Prob. 16.5ECh. 16 - Prob. 16.6ECh. 16 - Prob. 16.7ECh. 16 - Prob. 16.8ECh. 16 - Confirmation of Cash Distribution Plan Refer to...Ch. 16 - Prob. 16.10ECh. 16 - Prob. 16.11A.1ECh. 16 - Prob. 16.11A.2ECh. 16 - Prob. 16.11A.3ECh. 16 - Prob. 16.11A.4ECh. 16 - Prob. 16.11A.5ECh. 16 - Prob. 16.11A.6ECh. 16 - Prob. 16.11A.7ECh. 16 - Prob. 16.11A.8ECh. 16 - Prob. 16.11A.9ECh. 16 - Prob. 16.11A.10ECh. 16 - Prob. 16.11A.11ECh. 16 - Prob. 16.12AECh. 16 - Prob. 16.13PCh. 16 - Prob. 16.14PCh. 16 - Prob. 16.15PCh. 16 - Prob. 16.16PCh. 16 - Prob. 16.17PCh. 16 - Prob. 16.18PCh. 16 - Matching Terms Match the items in the left-hand...Ch. 16 - Prob. 16.20P
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- 1. 2. EXERCISE 4. Journal Entries - Cash, non-cash, and industry contributions. Prepare and upload the journal entries to record contributions of Kim and Krislam into the partnership under the following independent assumptions: 3. Page 4. 9 Cash contribution amounting to P45,000 each. Kim contributed P35,000 cash and a store equipment with carrying value of $27,000. Krislam contributed P15,000 cash and a delivery vehicle with a fair market value of P195,000. Kim and Krislam agreed that each depreciable asset is overvalued by $4,000. Kim contributed P10,000 cash and furniture and fixtures with carrying value of P32,000. Krislam contributed P5,000 cash and a building with a fair market value of P295,000 and an unpaid mortgage of P27,500. Kim and Krislam agreed that building is undervalued by P9,000. Kim contributed P25,000 cash, a store equipment with fair market value of P47,000, and delivery vehicle with a fair market value of P175,000. Krislam, an industrial partner, was to contribute…arrow_forwardLet's try these: Prepare the journal entries for the following transactions: July 1- Mr. Bon Hok withdraw P20,000 cash charge to share in profits. 2 - Mr. Ok made an additional contribution of P30,000 cash. 3 Mr. Meng bought goods on account from the partnership, P 10,000 4 The partnership borrowed P50,000 from Mr. Hok. 5 Mr. Meng fully paid its account to the partnership. 6. The partnership pays 50% of its borrowings to Mr. Hok. 7 Mr. Ok permanently withdraw P 20,000 cash from the prtnersip. 8. Assuming at the end of the accounting period, the partnership earns profit of P80,000 and decided to distribute the profits to the partners.arrow_forwardInstruction: Prepare the answers and solutions in written form using a clean paper (e.g. Yellow pod, bond paper, notebook etc.) and submit a snapshot in CANVAS. The balance sheet of A on November 30, 2020 before accepting B as his partner to form AB Partnership is presented below: Assets: Cash 120,000 Accounts receivable 48,000 Less: Allowance for uncollectible accounts 3.000 45,000 Notes receivable 60,000 Merchandise inventory 27,000 Equipment 72,000 Less: Accumulated Depreciation 6,000 56,000 Total assets 318,000 Liabilities and Capital Accounts payable 12,000 Notes payable 60,000 A, Capital 246,000 Total liabilities and capital 318,000 It is agreed that for the purpose of establishing A's interest the following adjustments shall be made: a. The accounts receivable is estimated to be 90% realizable. b. Interest at 8% of notes receivable dated March 1, 2019 is to be accrued. c. Merchandise inventory is to be valued at P21,000. d. The equipment is under-depreciated by P4,800. e.…arrow_forward
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