Lump-Sum LiquidationThree university students, Cho, Kenney, and Martinez, operated a successful business, renting furniture and appliances to students residing in dormitories and off-campus apartments. The three are nowgraduating and wish to sell the business before beginning their respective careers. They shared profits in a 7.5.4 ratio The partnership's current balance sheet is as follows:Cash$6,000 Accounts payable$60,00010,00025,000 Loan payable-Kenney15,000 Capital—Cho27,00028,000140,000 Capital-KenneyCapital-Martinez61,000Total assets$186,000 Total liabilities and capital $186,000Another student group, organized as a corporation, wants to buy the business. Their offer of $105,000 for the equipment and $12,000 for the receivables is accepted. After receipt of the $117,000, the liabilities arepaid and the partnership is liquidated.RequiredHow much does each partner receive?Cash DistributionCho$9,000Kenney $ 23,000Martinez $ 49,000ReceivablesLoan receivable-ChoRental equipment, net

Loss on liquidation:We need to determine loss on liquidation after realisation of assets and…

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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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The Taurin Partnership (a calendar-year-end entity) has the following assets as of December 31 of the current year Cash Accounts receivable Inventory Тах Basis $ 45,000 15,000 81, 000 $ 141,000 FMV $ 45,000 30, 000 120, 000 $ 195,800 Totals On December 31, Taurin distributes $15,000 of cash, $10,000 (FMV) of accounts receivable, and $40.000 (FMV inventory to Emma (a one-third partner) in termination of her partnership interest. Emma's basis in he partnershi Immediately prior to the distribution is $40,000. st b. What is Emma's basis in the distributed assets? (Do not round intermediate calculations. Round your finetawers to the nearest whole dollar amount.) Basis Cash 15,000 Accounts receivable Inventory
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Business entity assumption Ozark Sports sells hunting and fishing equipment and provides guided hunting and fishing trips. Ozark is owned and operated by Eric Griffith, a well-known sports enthusiast and hunter. Eric's wife, Linda, owns and operates Lake Boutique, a women's clothing store. Eric and Linda have established a trust fund to finance their children's college eductation . The trust fund is maintained by Missouri Stale Bank in the name of the children, Mark and Steffy A. For each of the following transactions, identity which of the entities listed should record the transction in its records: Entities L Lake Botique M Missouri State Bank O Ozark Sports X None of the above 1.Lind authorized the trust fund to purchase mutual fund shares. 2.Linda purchased two dozen spring dresses from a St.Luis designer for a special spring sale. 3. Eric paid a breeder's fee for an English springer spaniel to be used as a hunting guide dog. 4.Linda deposited a $2000…
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