Capital X, Y, and Z are $10,000 and $8,000 and $10,000, respectively: Profits are divided inthe ratio of 30%:25%:45%. On liquidation, all assets of the partnership firm are sold andconverted into cash in an amount sufficient to pay all claims, except for one claim of$4,000. Z is personally therapeutically insolvent the other two partners are able to fulfillevery obligation to the partnership firm. State how the solution should be done.

Partnership is a business in which two or more than two persons agree to carry common business and…

Answered: Capital X, Y, and Z are $10,000 and…

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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Hewitt and Patel are partners, sharing gains and losses equally. They decide to terminate their partnership. Prior to realization, their capital balances are $6,000 and $4,000, respectively. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $8,000. Question Content Area a. What is the amount of a gain or loss on realization? $fill in the blank a082cef9b012fe9_2 Question Content Area b. How should the gain or loss be divided between Hewitt and Patel? Hewitt $fill in the blank fe57f5f50043050_2 Patel $fill in the blank fe57f5f50043050_4 Question Content Area c. How should the cash be divided between Hewitt and Patel? If an amount is zero, enter "0". blankHewitt and PatelDistribution of Cash Hewitt Patel Capital balances before realization $fill in the blank 2e3dfe08df82014_1 $fill in the blank 2e3dfe08df82014_2 Division of gain or loss on realization fill in the blank…
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Dexter, Edwards, and French are partners with the following capital balance and profit and loss sharing percentages: Dexter $200,000 (70%) Edwards 120,000 (20%) French 60,000 (10%) It is agreed that Edwards will withdraw from the partnership and receive his capital balance plus his share of any increase in the fair value over book value of the underlying assets of the partnership. Assume the total increase in fair value is $100,000. a. if the bonus method is used what is the balance in Dexter’s capital account after the withdrawal of Edwards? b. if the goodwill method is used, what is the balance of the French’s capital account after the withdrawal of Edwards? Answer a and b both
A partnership is considering possible liquidation because one of the partners (Bell) is personally insolvent. Profits and losses are divided on a 4:3:2:1 basis, respectively. Capital balances at the current time are Bell, capital $ 65,000 Hardy, capital 62,000 Dennard, capital 14,000 Suddath, capital 86,000 Bell’s creditors have filed a $27,000 claim against the partnership’s assets. The partnership currently holds assets of $360,000 and liabilities of $133,000. If the assets can be sold for $220,000, what is the minimum amount that Bell’s creditors would receive?
Chen, Korhonen, Lebuca, and Swid are partners who share profits and losses on a 4:3:2:1 basis, respectively. They are beginning to liquidate the business. At the start of this process, capital balances are Chen, capital Korhonen, capital Lebuca, capital Swid, capital $ 60,000 27,000 43,000 20,000 Required: Prepare a predistribution plan to determine which partner will be the first to receive cash from the liquidation and what amount that partner will receive before other partners receive any cash. Note: Amounts to be deducted should be entered with a minus sign. Beginning balances Assumed loss Balances Assumed loss Balances Assumed loss Balances $ Chen Korhonen 60,000 $ Lebuca 27,000 $ 43,000 $ Swid 20,000:
Adams, Peters, and Blake share profits and losses for their APB Partnership in a ratio of 2:3:5. When they decide to liquidate, the balance sheet is as follows: Assets Liabilities and Capital $ 49,000 Cash Adams, Loan Other Assets Total Assets 11,800 218,000 Liabilities Adams, Capital Peters, Capital Blake, Capital Total Liabilities and Equities $ 278,800 $ 45,500 64,900 88,500 79,900 $ 278,800 Liquidation expenses are expected to be negligible. No interest accrues on loans with partners after termination of the business. During the liquidation process for the APB Partnership, the following events occurred: 1. During the first month of liquidation, noncash assets with a book value of $89,500 were sold for $68,000, and $22,500 of the liabilities were paid. 2. During the second month, the remaining noncash assets were sold for $78,000. The loan receivable from Adams was collected, and the rest of the creditors were paid. 3. Cash is distributed to partners at the end of each month.…
Chen, Korhonen, Lebuca, and Swid are partners who share profits and losses on a 4:3:2:1 basis, respectively. They are beginning to liquidate the business. At the start of this process, capital balances are Chen, capital Korhonen, capital Lebuca, capital Swid, capital Required: $ 68,000 29,400 51,000 22,400 Prepare a predistribution plan to determine which partner will be the first to receive cash from the liquidation and what amount that partner will receive before other partners receive any cash. Note: Amounts to be deducted should be entered with a minus sign. Beginning balances Assumed loss Balances Assumed loss Balances Assumed loss Balances Chen Korhonen Lebuca Swid $ 68,000 $ 29,400 $ 51,000 $ 22,400

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