Part A To determine Prepare a predistribution plan for the partnership. Explanation Predistribution plan for the partnership Pre-distribution plan Available Cash Amount Recipient First $204,000 The firm pays all its liabilities and liquidation expenses of $204,000 Next $45,000 The firm pays $45,000 to person B Next $15,000 The firm pays $15,000 distributed between person B and person W in the ratio of 25:50 Further cash balances The firm pays all further cash balances distributed between person B, person O and person W in the ratio of 25:25:50 Table: (1) Loan from person B is to be paid and is added to his capital balance Working note: Calculate maximum allocated loss for all the partners: Maximum allocated loss for person B = $ 80 , 000 25 % = $ 80 , 000 × 100 25 = $ 8 , 000 , 000 25 = $ 320 , 000 Now, for all other partners: Maximum allocated loss for person O = $ 30 , 000 25 % = $ 30 , 000 × 100 25 = $ 3 , 000 , 000 25 = $ 120 , 000 Now, calculate for other partners: Maximum allocated loss for person W = $ 70 , 000 50 % = $ 70 , 000 × 100 50 = $ 7 , 000 , 000 50 = $ 140 , 000 Person O has least maximum allocated loss of $120,000. Hence, it is to be considered first. Calculate the loss distribution for the partners: Loss share for person B and person O = $ 120 , 000 × 25 % = $ 30 , 000 Loss share for person W = $ 120 , 000 × 50 % = $ 60 , 000 Calculate the ending capital balance for the partners: Particulars Person B Person O Person W Beginning balance $ 80,000< Part B To determine Prepare journal entries to record the liquidation transactions.

Loose Leaf for Fundamentals of Advanced Accounting

7th Edition

ISBN: 9781260151879

Author: Hoyle, Joe Ben; Schaefer, Thomas; Doupnik, Timothy

Publisher: McGraw-Hill Education

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Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 10, Problem 33P

Part A

To determine

Prepare a predistribution plan for the partnership.

Part B

To determine

Prepare journal entries to record the liquidation transactions.

Expert Solution & Answer

Chapter 10 Solutions

Loose Leaf for Fundamentals of Advanced Accounting

Ch. 10 - Prob. 1Q Ch. 10 - Prob. 2Q Ch. 10 - Prob. 3Q Ch. 10 - Prob. 4Q Ch. 10 - Prob. 5Q Ch. 10 - Prob. 6Q Ch. 10 - Prob. 7Q Ch. 10 - Prob. 8Q Ch. 10 - Prob. 9Q Ch. 10 - Prob. 10Q

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