Advanced Financial Accounting
11th Edition
ISBN: 9780078025877
Author: Theodore E. Christensen, David M Cottrell, Cassy JH Budd Advanced Financial Accounting
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 16, Problem 16.9E
Confirmation of Cash Distribution Plan
Refer to the data in exercise E16-8. During the liquidation process for the APB
- During the first month of liquidation, noncash assets with a book value of $85,000 were sold for $65,000, and $21,000 of the liabilities were paid.
- During the second month, the remaining noncash assets were sold for $79,000. The loan receivable from Adams was collected, and the rest of the creditors were paid.
- Cash is distributed to partners at the end of each month.
Required
Prepare a statement of partnership realization and liquidation with a schedule of safe payments to partners for the liquidation period.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
EXERCISE 8-9. Problem Solving 1: Selling price of non-cash assets; cash distribution.
As of December 31, 2019, the books of May, Mae, and Mei showed capital balances of
P300,000, P250,000, and P100,000, respectively, and cash balance of P25,000. They shared
profits and losses equally. On that date, the partners decided to liquidate due to personal
reasons. They sold all non-cash assets to Mia at a loss of P90,000. After settling the liabilities
to external creditors amounting to P100,000, the partnership had enough cash to distribute to
the partners that included a loan from May in the amount of P12,000.
REQUIRED:
1. How much were the non-cash assets sold for?
2. How much cash was distributed to each partner?
After all noncash assets have been converted to cash in the liquidation of MM Partnership, the ledger contains the following account balances: Debit balances: Cash: P 34, 000; Mae, Capital: P 8, 000; Credit balances: A/P: P 25, 000; Mae, Loan: P 9, 000; Mila, Capital: P 8, 000. After paying the A/P of P25, 000, available cash should be distributed to
A condensed balance sheet for a partnership to be liquidated is as follows:(attached)The profit and loss percentages for Partners A, B, and C are 50%, 30%, and 20%, respectively. For each of the following independent scenarios, determine how much of the available cash, with the exception of $10,000, would be distributed to Partner B.1. Assume that the receivables and the inventory were liquidated for $140,000 cash.2. Assume that all noncash assets other than equipment were sold for $53,000 cash.3. Assume that noncash assets with a book value of $300,000 were sold for $250,000 cash and that a distribution to Partner A was made in order to pay off the loan payable to them.
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
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- 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.arrow_forwardA. After all the non-cash assets have been converted into cash in the liquidation of Sun and Star Partnership, the ledger contains the following account balances: Cash - P141,000; Accounts Payable - P 96,000; Sun, Loan - P 45,000; Sun, Capital -(P21,000); Star, Capital - P21,000. How much is the final settlement to Sun assuming cash of P 96,000 is paid to Accounts Payable? B. Using data above, how much is the final settlement to Star? *arrow_forwardThe Drysdale, Koufax, and Marichal partnership has the following balance sheet immediately prior to liquidation: Cash Noncash assets Req A1 a-1. Determine the maximum loss that can be absorbed in Step 1. Then, assuming that this loss has been incurred, determine the next maximum loss that can be absorbed in Step 2. a-2. Liquidation expenses are estimated to be $19,000. Prepare a predistribution schedule to guide the distribution of cash. Further, modify the tags in explanation as well. b. Assume that assets costing $78,000 are sold for $62,000. How is the available cash to be divided? Complete this question by entering your answers in the tabs below. Step 1 $ 40,000 224,000 Partner Capital Balance Drysdale Koufax Marichal Determine the maximum loss that can be absorbed in Step 1. Then, assuming that this loss has been incurred, determine the next maximum loss that can be absorbed in Step 2. Step 2 Liabilities Drysdale, loan Drysdale, capital (50%) Koufax, capital (30%) Marichal,…arrow_forward
- First Next Next $ Cash over $ Cash Distribution Plan: 0 to creditors 0 to Riley 0 to Whitehead and Riley in a 5:2 ratio 0 to Whitehead, Ellis and Riley in a 5:3:2 ratio <arrow_forwardThe Taurin Partnership (a calendar-year-end entity) has the following assets as of December 31 of the current year: Таx Basis FMV $ 49,800 16,600 $ 49,800 33,200 128,400 $ 211,400 Cash Accounts receivable Inventory 87,000 Totals $ 153,400 On December 31, Taurin distributes $16,600 of cash, $11,067 (FMV) of accounts receivable, and $42,800 (FMV) of inventory to Emma (a one-third partner) in termination of her partnership interest. Emma's basis in her partnership interest immediately prior to the distribution is $43,533. c1. If Emma's basis before the distribution was $60,033 rather than $43,533, what is Emma's recognized gain or loss? c2. What is her basis in the distributed assets? Complete this question by entering your answers in the tabs below. Req C1 Req C2 What is her basis in the distributed assets? (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.) Basis Cash Accounts receivable Inventoryarrow_forwardThe Taurin Partnership (a calendar-year-end entity) has the following assets as of December 31 of the current year: Таx Basis $ 49,800 16,600 FMV $ 49,800 33,200 128,400 $ 211,400 Cash Accounts receivable Inventory 87,000 Totals $ 153,400 On December 31, Taurin distributes $16,600 of cash, $11,067 (FMV) of accounts receivable, and $42,800 (FMV) of inventory to Emma (a one-third partner) in termination of her partnership interest. Emma's basis in her partnership interest immediately prior to the distribution is $43,533. b. What is Emma's basis in the distributed assets? (Round your intermediate and final answers to the nearest whole dollar amount.) Basis Cash Accounts receivable Inventoryarrow_forward
- Victory Worship Partnership has the following account balances before liquidation (see attached photo):During December, some non-cash assets were sold for a loss of P1,845. Liquidation expenses of P7,000 were paid and additional expenses amounting to P3,600 were expected to be incurred through the following months of liquidating the partnership. Liabilities to outsiders amounting to P35,000 were paid. What is the book value of non-cash assets sold for Co to receive P22,222?arrow_forwardVictory Worship Partnership has the following account balances before liquidation (see attached photo):During December, some non-cash assets were sold for a loss of P1,845. Liquidation expenses of P7,000 were paid and additional expenses amounting to P3,600 were expected to be incurred through the following months of liquidating the partnership. Liabilities to outsiders amounting to P35,000 were paid. What is the book value of non-cash assets sold for Co to receive P22,222? A. 83,355 B. 85,200 C. 95,000 D. 93,155arrow_forwardAfter operating for 5 years, the books of A and B showed the following balances with equal distribution in profit: Assets (Cash and Non-cash assets) 130,000 A, Capital B, Capital If liquidation takes place at this point and the net assets are realized at P150,000. Profits and losses are shared equally. Compute the amount of cash distributed to partner B in the final settlement of their capital account. 60,000 70,000arrow_forward
- The statement of financial position of PRUTZ Partnership as of December 31, 2017 show the following balances before they decided to liquidate Cash P 4,200; Receivable from Kahel P5,000; Other Assets P200,000; Liabilities P 75,000; Apol, Capital P60,000; Kahel, Capital P50,000; Santol, Capital P24,200. Profit and Loss ratio were divided in the ratio 30%, 30% and 40% to Apol, Kahel and Santol respectively. The Other Assets were sold in 4 equal installment with gain (loss) on realization amounting to (P14,000), P0, (P47,000) and P45,000 respectively during the months of January, February, March and April 2018. For the first installment-sale of the other assets, the cash available distributed to the partners the book value of the assets sold per instalment amounted to: for the 3rd instalment-sale of the assets, the other assets were sold for: capital interest of Kahel amounted to: loss absorption capacity of Kahel amounted to final distribution of Cash available Apol…arrow_forwardThe capital accounts of Scott and Tucker at the end of the fiscal year 2019 are as follows: Scott, Capital January 1 Balance P210,000 Мay 1 Investment 90,000 October 1 Withdrawal Р60,000 Tucker, Capital January 1 Balance P150,000 April 1 Withdrawal P30,000 The partnership profit for the year ended December 31, 2019 was P300,000. Instruction: Prepare schedule of profit allocation and journal entries to record transfer to profit to the capital accounts under each of the following independent assumptions: 1. Profit is divided 60% to Scott and 40% to Tucker. 2. Profit is divided into ratio of capital balances at the beginning of the period. 3. Profit is divided in the ratio of average capital balance. Interest of 8% is allowed on the average capital and the balance of profit is divided equally. 4. Salaries of P60,000 and P48,000 are allowed to Scott and Tucker, respectively, and the balance of the profit is divided in the ratio of capital balances at the end of the period. 5. 6. Scott is…arrow_forwardThe balance sheet of Maroon and White was as follows immediately prior to the partnership's being liquidated: cash, P20,000; other assets, P160,000; liabilities, P40,000; Maroon capital, P60,000; White capital, P80,000. The other assets were sold for P139,000. Maroon and White share profits and losses in a 2:1 ratio. As a final cash distribution from the liquidation, how much cash will Maroon receive? Prepare a statement of liquidation.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning
What is liquidity?; Author: The Finance Storyteller;https://www.youtube.com/watch?v=XtjS7CfUSsA;License: Standard Youtube License