A partnership has the following account balances at the date of termination: Cash, $84,000; Noncash Assets, $680,000; Liabilities, $395,000; Bell, capital (50 percent of profits and losses), $175,000; Mann, capital (30 percent), $120,000; Scott, capital (20 percent), $74,000. The following transactions occur during liquidation: Noncash assets with a book value of $520,000 are sold for $420,000 in cash. A creditor reduces his claim against the partnership from $160,000 to $140,000, and this amount is paid in cash. The remaining noncash assets are sold for $130,000 in cash. The remaining liabilities of $235,000 are paid in full. Liquidation expenses of $16,000 are paid in cash. Cash remaining after the above transactions have occurred is distributed to the partners. Prepare a statement of partnership liquidation to determine how much cash each partner receives from the liquidation of the partnership. (Amounts to be deducted should be entered with a minus sign.) Need the answer to distribution to partners. BELL, MANN, AND SCOTT PARTNERSHIP Statement of Partnership Liquidation Cash Noncash Assets Liabilities Bell, Capital (50%) Mann, Capital (30%) Scott, Capital (20%) Beginning balances $84,000 $680,000 $395,000 $175,000 $120,000 $74,000 Sale of noncash assets 420,000 (520,000) (50,000) (30,000) (20,000) Pay liabilities (140,000) (160,000) 10,000 6,000 4,000 Sale of remaining noncash assets 130,000 (160,000) (15,000) (9,000) (6,000) Pay remaining liabilities (235,000) (235,000) Pay liquidation expenses (16,000) Subtotal $243,000 $0 $0 $120,000 $87,000 $52,000 Distribution to partners (243,000) Ending balances $0 $0 $0 $120,000 $87,000 $52,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A partnership has the following account balances at the date of termination: Cash, $84,000; Noncash Assets, $680,000; Liabilities, $395,000; Bell, capital (50 percent of profits and losses), $175,000; Mann, capital (30 percent), $120,000; Scott, capital (20 percent), $74,000. The following transactions occur during liquidation:

Noncash assets with a book value of $520,000 are sold for $420,000 in cash.
A creditor reduces his claim against the partnership from $160,000 to $140,000, and this amount is paid in cash.
The remaining noncash assets are sold for $130,000 in cash.
The remaining liabilities of $235,000 are paid in full.
Liquidation expenses of $16,000 are paid in cash.
Cash remaining after the above transactions have occurred is distributed to the partners.

Prepare a statement of partnership liquidation to determine how much cash each partner receives from the liquidation of the partnership. (Amounts to be deducted should be entered with a minus sign.)

Need the answer to distribution to partners.

BELL, MANN, AND SCOTT PARTNERSHIP
Statement of Partnership Liquidation
	Cash	Noncash Assets	Liabilities	Bell, Capital (50%)	Mann, Capital (30%)	Scott, Capital (20%)
Beginning balances	$84,000	$680,000	$395,000	$175,000	$120,000	$74,000
Sale of noncash assets	420,000	(520,000)		(50,000)	(30,000)	(20,000)
Pay liabilities	(140,000)		(160,000)	10,000	6,000	4,000
Sale of remaining noncash assets	130,000	(160,000)		(15,000)	(9,000)	(6,000)
Pay remaining liabilities	(235,000)		(235,000)
Pay liquidation expenses	(16,000)
Subtotal	$243,000	$0	$0	$120,000	$87,000	$52,000
Distribution to partners	(243,000)
Ending balances	$0	$0	$0	$120,000	$87,000	$52,000

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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