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FINANCIAL ACCOUNTING

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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Question

The following are ledger balances of Red White and Blue partnership

Cash 60,000

Non Cash Assets 500,000

Accounts Payable (280,000)

Red, Capital (150,000)

White, Capital (70,000)

Blue, Capital (60,000)

The partners profit and loss is 40,35 and 25% respectively. The partners agreed to liquidate in installment.

If the 1st non cash asset with book value of P300,000 was sold for 250,000 what amount of cash should be distributed to the partners?

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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10 of estion L, M, and N are in the process of liquidating their partnership. Since it may take several months to convert the other assets into cash, the partners agree to distribute all available cash immediately, except for $12,000 which is set aside for contingent expenses. The balance sheet 25,000 and residual profit and loss sharing percentages are as follows: Cash 500,000 Accounts payable Other assets 225,000 L, capital (20%) 168,000 270,000 N, capital (50%) M, capital (30%) 262,000 Using a safe payment schedule, how much cash should M receive in the first distribution?
The partnership of Winn, Xie, Yang, and Zed has the following balance sheet: Cash Other assets $ 40,000 257,000 Liabilities Winn, capital (50% of profits and losses) Xie, capital (30%) Yang, capital (10%) Zed, capital (10%) Beginning capital Assumed loss of Schedule 1 Step one balances Assumed loss of Schedule 2 Step two balances Assumed loss of Schedule 3 Step three balances Zed is personally insolvent, and one of his creditors is considering suing the partnership for the $3,000 that is currently owed. The creditor realizes that this litigation could result in partnership liquidation and does not wish to force such an extreme action unless Zed is reasonably sure of obtaining at least $3,000 from the liquidation. Prepare a predistribution plan to determine the amount for which the partnership must sell the other assets to ensure that Zed receives $3,000 from the liquidation. Liquidation expenses are expected to be $25,000. (Do not round intermediate calculations.) $ $ $ Winn 0 $ 0 $ 0…
Gerald and Julia are joining their separate business to form a partnership and they agreed to share profits in the manner of 55% for Gerald and 45% for Julia. Property is to be contributed for a total capital of P800,000. The partners agreed to make their capital accounts equal after formation. How much cash must be contributed by each of the partners after they contributed their properties? Gerald Julia Book Value Fair Value Book Value Fair Value Accounts Receivable 60,000 60,000 - - Inventories 60,000 90,000 160,000 180,000 Equipment 100,000 80,000 180,000 190,000 Accounts Payable 30,000 30,000 20,000 20,000

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