A partnership has the following account balances at the date of termination: Cash, $80,000; Noncash Assets, $660,000; Liabilities, $320,000; Bell, capital (50 percent of profits and losses), $200,000; Mann, capital (30 percent), $120,000; Scott, capital (20 percent), $100,000. The following transactions occur during liquidation: Noncash assets with a book value of $500,000 are sold for $400,000 in cash.A creditor reduces his claim against the partnership from $120,000 to $100,000, and this amount is paid in cash. The remaining noncash assets are sold for $130,000 in cash.The remaining liabilities of $200,000 are paid in full.Liquidation expenses of $24,000 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.) ### Bell, Mann, and Scott Partnership#### Statement of Partnership LiquidationThis template outlines the steps involved in the liquidation process of the Bell, Mann, and Scott partnership. It provides a detailed financial breakdown of the cash, noncash assets, liabilities, and capital distribution between the partners, Bell, Mann, and Scott. The respective ownership percentages are Bell (50%), Mann (30%), and Scott (20%).| | Cash | Noncash Assets | Liabilities | Bell, Capital (50%) | Mann, Capital (30%) | Scott, Capital (20%) ||-----------------------------------|------|----------------|-------------|---------------------|---------------------|----------------------|| **Beginning balances** | | | | | | || **Sale of noncash assets** | | | | | | || **Pay liabilities** | | | | | | || **Sale of remaining noncash assets**| | | | | | || **Pay remaining liabilities** | | | | | | || **Pay liquidation expenses** | | | | | | || **Subtotal** | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 || **Distribution to partners** | | | | | | || **Ending balances** | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |#### Explanation of the Columns:- **Cash**: This column tracks the partnership's cash balance throughout the liquidation process.- **Noncash Assets**: This column shows the value of noncash assets, which are intended to be liquidated.- **Liabilities**: This column records the partnership's outstanding liabilities to be settled during liquidation.- **Bell, Capital (50%)**: Reflects the proportion of final distributions, gains, or losses attributed to Bell.- **Mann, Capital (30%)**: Reflects the proportion of final distributions, gains, or losses attributed to Mann.- **Scott, Capital (20%)**: Reflects the proportion of final distributions, gains, or losses attributed to Scott.During

Partnership- A partnership is a formal agreement between two or more people to manage and operate a…

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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, $80,000; Noncash Assets, $660,000; Liabilities, $320,000; Bell, capital (50 percent of profits and losses), $200,000; Mann, capital (30 percent), $120,000; Scott, capital (20 percent), $100,000. The following transactions occur during liquidation:

Noncash assets with a book value of $500,000 are sold for $400,000 in cash.
A creditor reduces his claim against the partnership from $120,000 to $100,000, and this amount is paid in cash.
The remaining noncash assets are sold for $130,000 in cash.
The remaining liabilities of $200,000 are paid in full.
Liquidation expenses of $24,000 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.)

### Bell, Mann, and Scott Partnership
#### Statement of Partnership Liquidation

This template outlines the steps involved in the liquidation process of the Bell, Mann, and Scott partnership. It provides a detailed financial breakdown of the cash, noncash assets, liabilities, and capital distribution between the partners, Bell, Mann, and Scott. The respective ownership percentages are Bell (50%), Mann (30%), and Scott (20%).

| | Cash | Noncash Assets | Liabilities | Bell, Capital (50%) | Mann, Capital (30%) | Scott, Capital (20%) |
|-----------------------------------|------|----------------|-------------|---------------------|---------------------|----------------------|
| **Beginning balances** | | | | | | |
| **Sale of noncash assets** | | | | | | |
| **Pay liabilities** | | | | | | |
| **Sale of remaining noncash assets**| | | | | | |
| **Pay remaining liabilities** | | | | | | |
| **Pay liquidation expenses** | | | | | | |
| **Subtotal** | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
| **Distribution to partners** | | | | | | |
| **Ending balances** | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |

#### Explanation of the Columns:
- **Cash**: This column tracks the partnership's cash balance throughout the liquidation process.
- **Noncash Assets**: This column shows the value of noncash assets, which are intended to be liquidated.
- **Liabilities**: This column records the partnership's outstanding liabilities to be settled during liquidation.
- **Bell, Capital (50%)**: Reflects the proportion of final distributions, gains, or losses attributed to Bell.
- **Mann, Capital (30%)**: Reflects the proportion of final distributions, gains, or losses attributed to Mann.
- **Scott, Capital (20%)**: Reflects the proportion of final distributions, gains, or losses attributed to Scott.

During

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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