Liquidation of partnership : Winding-up and liquidation of the partnership begin after its dissolution. The winding-up process includes the transactions necessary to liquidate the partnership, such as collection of receivables disposal of noncash assets, payment of partnership’s obligations and distribution of any remaining net balance to the partners, in cash according to their capital interests. If partnership agreement does not have any provisions on liquidation or any liquidation ratio or profits or loss ratio for distribution of remaining balance it is distributed using normal profit and loss ratio during partnership’s operation. Requirement 1 the amount of cash each partner will receive when profit and loss sharing ratio is 3:3:2:2

Question

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Answer 1

Question

Chapter 16, Problem 16.7E

a

To determine

Liquidation of partnership: Winding-up and liquidation of the partnership begin after its dissolution. The winding-up process includes the transactions necessary to liquidate the partnership, such as collection of receivables disposal of noncash assets, payment of partnership’s obligations and distribution of any remaining net balance to the partners, in cash according to their capital interests. If partnership agreement does not have any provisions on liquidation or any liquidation ratio or profits or loss ratio for distribution of remaining balance it is distributed using normal profit and loss ratio during partnership’s operation.

Requirement 1

the amount of cash each partner will receive when profit and loss sharing ratio is 3:3:2:2

a

Expert Solution

Answer to Problem 16.7E

When profit and loss sharing ratio for partners N, O, P, and Q, is 3:3:2:2 each partner will get payments as follows:

N - $0

O - $42,857

P - $53,572

Q - $8,571

Explanation of Solution

	N 30%	O 30%	P 20%	Q 20%
Capital balance at beginning	15,000	75,000	75,000	30,000
Loss on sale of asset $190,000 − 100,000 = $90,000	(27,000)	(27,000)	(18,000)	(18,000)
Balance after allocation of loss	(12,000)	48,000	57,000	12,000
Distribution of deficit of insolvent partner N	12,000
O $12,000 x 30/70		(5,143)
P $12,000 x 20/70			(3.428)
Q $12,000 x 20/ 70				(3,429)
Capital after distribution of N’s deficit	0	42,857	53,572	8,571
Payment to partners	0	(42,857)	(53,572)	(8,571)

b

To determine

Liquidation of partnership: Winding-up and liquidation of the partnership begin after its dissolution. The winding-up process includes the transactions necessary to liquidate the partnership, such as collection of receivables disposal of noncash assets, payment of partnership’s obligations and distribution of any remaining net balance to the partners, in cash according to their capital interests. If partnership agreement does not have any provisions on liquidation or any liquidation ratio or profits or loss ratio for distribution of remaining balance it is distributed using normal profit and loss ratio during partnership’s operation.

Requirement 2

the amount of cash each partner will receive when profit and loss sharing ratio is 3:1:2:2

b

Expert Solution

Answer to Problem 16.7E

When profit and loss sharing ratio for partners N, O, P, and Q, is 3:1:2:2 each partner will get payments as follows:

N - $0

O - $63,750

P - $41,250

Q - $0

Explanation of Solution

	N 30%	O 10%	P 20%	Q 20%
Capital balance at beginning	15,000	75,000	75,000	30,000
Loss on sale of asset $190,000 − 100,000 = $90,000	(27,000)	(9,000)	(27,000)	(27,000)
Balance after allocation of loss	(12,000)	66,000	48,000	3,000
Distribution of deficit of insolvent partner N	12,000
O $12,000 x 10/70		(1,714)
P $12,000 x 30/70			(5,143)
Q $12,000 x 30/ 70				(5,143)
Capital after distribution of N’s deficit	0	64,286	42,857	(2,143)
Distribution of Q deficit				2,143
Q $2,143 x 10/40		(536)
P $2,143 x 30/40			(1607)
Capital after distribution of Q’s deficit	0	63,750	41,250	0
Payment to partners	0	(63,750)	(41,250)	0

c

To determine

Liquidation of partnership: Winding-up and liquidation of the partnership begin after its dissolution. The winding-up process includes the transactions necessary to liquidate the partnership, such as collection of receivables disposal of noncash assets, payment of partnership’s obligations and distribution of any remaining net balance to the partners, in cash according to their capital interests. If partnership agreement does not have any provisions on liquidation or any liquidation ratio or profits or loss ratio for distribution of remaining balance it is distributed using normal profit and loss ratio during partnership’s operation.

Requirement 3

the amount of cash each partner will receive when profit and loss sharing ratio is 3:1:2:4

c

Expert Solution

Answer to Problem 16.7E

When profit and loss sharing ratio for partners N, O, P, and Q, is 3:1:2:4 each partner will get payments as follows:

N - $0

O - $60,000

P - $45,000

Q - $0

Explanation of Solution

	N 30%	O 10%	P 20%	Q 40%
Capital balance at beginning	15,000	75,000	75,000	30,000
Loss on sale of asset $190,000 − 100,000 = $90,000	(27,000)	(9,000)	(18,000)	(36,000)
Balance after allocation of loss	(12,000)	66,000	57,000	(6,000)
Distribution of deficit of insolvent partner N, Q	12,000			6,000
O $18,000 x 10/30		(6,000)
P $12,000 x 20/30			(12,000)
Capital after distribution of N’s & Q’s deficit	0	60,000	45,000	0
Payment to partners	0	(60,000)	(45,000)	0

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Answer 2

Question

Chapter 16, Problem 16.7E

a

To determine

Liquidation of partnership: Winding-up and liquidation of the partnership begin after its dissolution. The winding-up process includes the transactions necessary to liquidate the partnership, such as collection of receivables disposal of noncash assets, payment of partnership’s obligations and distribution of any remaining net balance to the partners, in cash according to their capital interests. If partnership agreement does not have any provisions on liquidation or any liquidation ratio or profits or loss ratio for distribution of remaining balance it is distributed using normal profit and loss ratio during partnership’s operation.

Requirement 1

the amount of cash each partner will receive when profit and loss sharing ratio is 3:3:2:2

a

Expert Solution

Answer to Problem 16.7E

When profit and loss sharing ratio for partners N, O, P, and Q, is 3:3:2:2 each partner will get payments as follows:

N - $0

O - $42,857

P - $53,572

Q - $8,571

Explanation of Solution

	N 30%	O 30%	P 20%	Q 20%
Capital balance at beginning	15,000	75,000	75,000	30,000
Loss on sale of asset $190,000 − 100,000 = $90,000	(27,000)	(27,000)	(18,000)	(18,000)
Balance after allocation of loss	(12,000)	48,000	57,000	12,000
Distribution of deficit of insolvent partner N	12,000
O $12,000 x 30/70		(5,143)
P $12,000 x 20/70			(3.428)
Q $12,000 x 20/ 70				(3,429)
Capital after distribution of N’s deficit	0	42,857	53,572	8,571
Payment to partners	0	(42,857)	(53,572)	(8,571)

b

To determine

Liquidation of partnership: Winding-up and liquidation of the partnership begin after its dissolution. The winding-up process includes the transactions necessary to liquidate the partnership, such as collection of receivables disposal of noncash assets, payment of partnership’s obligations and distribution of any remaining net balance to the partners, in cash according to their capital interests. If partnership agreement does not have any provisions on liquidation or any liquidation ratio or profits or loss ratio for distribution of remaining balance it is distributed using normal profit and loss ratio during partnership’s operation.

Requirement 2

the amount of cash each partner will receive when profit and loss sharing ratio is 3:1:2:2

b

Expert Solution

Answer to Problem 16.7E

When profit and loss sharing ratio for partners N, O, P, and Q, is 3:1:2:2 each partner will get payments as follows:

N - $0

O - $63,750

P - $41,250

Q - $0

Explanation of Solution

	N 30%	O 10%	P 20%	Q 20%
Capital balance at beginning	15,000	75,000	75,000	30,000
Loss on sale of asset $190,000 − 100,000 = $90,000	(27,000)	(9,000)	(27,000)	(27,000)
Balance after allocation of loss	(12,000)	66,000	48,000	3,000
Distribution of deficit of insolvent partner N	12,000
O $12,000 x 10/70		(1,714)
P $12,000 x 30/70			(5,143)
Q $12,000 x 30/ 70				(5,143)
Capital after distribution of N’s deficit	0	64,286	42,857	(2,143)
Distribution of Q deficit				2,143
Q $2,143 x 10/40		(536)
P $2,143 x 30/40			(1607)
Capital after distribution of Q’s deficit	0	63,750	41,250	0
Payment to partners	0	(63,750)	(41,250)	0

c

To determine

Liquidation of partnership: Winding-up and liquidation of the partnership begin after its dissolution. The winding-up process includes the transactions necessary to liquidate the partnership, such as collection of receivables disposal of noncash assets, payment of partnership’s obligations and distribution of any remaining net balance to the partners, in cash according to their capital interests. If partnership agreement does not have any provisions on liquidation or any liquidation ratio or profits or loss ratio for distribution of remaining balance it is distributed using normal profit and loss ratio during partnership’s operation.

Requirement 3

the amount of cash each partner will receive when profit and loss sharing ratio is 3:1:2:4

c

Expert Solution

Answer to Problem 16.7E

When profit and loss sharing ratio for partners N, O, P, and Q, is 3:1:2:4 each partner will get payments as follows:

N - $0

O - $60,000

P - $45,000

Q - $0

Explanation of Solution

	N 30%	O 10%	P 20%	Q 40%
Capital balance at beginning	15,000	75,000	75,000	30,000
Loss on sale of asset $190,000 − 100,000 = $90,000	(27,000)	(9,000)	(18,000)	(36,000)
Balance after allocation of loss	(12,000)	66,000	57,000	(6,000)
Distribution of deficit of insolvent partner N, Q	12,000			6,000
O $18,000 x 10/30		(6,000)
P $12,000 x 20/30			(12,000)
Capital after distribution of N’s & Q’s deficit	0	60,000	45,000	0
Payment to partners	0	(60,000)	(45,000)	0

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Answer 3

Question

Chapter 16, Problem 16.7E

a

To determine

Liquidation of partnership: Winding-up and liquidation of the partnership begin after its dissolution. The winding-up process includes the transactions necessary to liquidate the partnership, such as collection of receivables disposal of noncash assets, payment of partnership’s obligations and distribution of any remaining net balance to the partners, in cash according to their capital interests. If partnership agreement does not have any provisions on liquidation or any liquidation ratio or profits or loss ratio for distribution of remaining balance it is distributed using normal profit and loss ratio during partnership’s operation.

Requirement 1

the amount of cash each partner will receive when profit and loss sharing ratio is 3:3:2:2

a

Expert Solution

Answer to Problem 16.7E

When profit and loss sharing ratio for partners N, O, P, and Q, is 3:3:2:2 each partner will get payments as follows:

N - $0

O - $42,857

P - $53,572

Q - $8,571

Explanation of Solution

	N 30%	O 30%	P 20%	Q 20%
Capital balance at beginning	15,000	75,000	75,000	30,000
Loss on sale of asset $190,000 − 100,000 = $90,000	(27,000)	(27,000)	(18,000)	(18,000)
Balance after allocation of loss	(12,000)	48,000	57,000	12,000
Distribution of deficit of insolvent partner N	12,000
O $12,000 x 30/70		(5,143)
P $12,000 x 20/70			(3.428)
Q $12,000 x 20/ 70				(3,429)
Capital after distribution of N’s deficit	0	42,857	53,572	8,571
Payment to partners	0	(42,857)	(53,572)	(8,571)

b

To determine

Liquidation of partnership: Winding-up and liquidation of the partnership begin after its dissolution. The winding-up process includes the transactions necessary to liquidate the partnership, such as collection of receivables disposal of noncash assets, payment of partnership’s obligations and distribution of any remaining net balance to the partners, in cash according to their capital interests. If partnership agreement does not have any provisions on liquidation or any liquidation ratio or profits or loss ratio for distribution of remaining balance it is distributed using normal profit and loss ratio during partnership’s operation.

Requirement 2

the amount of cash each partner will receive when profit and loss sharing ratio is 3:1:2:2

b

Expert Solution

Answer to Problem 16.7E

When profit and loss sharing ratio for partners N, O, P, and Q, is 3:1:2:2 each partner will get payments as follows:

N - $0

O - $63,750

P - $41,250

Q - $0

Explanation of Solution

	N 30%	O 10%	P 20%	Q 20%
Capital balance at beginning	15,000	75,000	75,000	30,000
Loss on sale of asset $190,000 − 100,000 = $90,000	(27,000)	(9,000)	(27,000)	(27,000)
Balance after allocation of loss	(12,000)	66,000	48,000	3,000
Distribution of deficit of insolvent partner N	12,000
O $12,000 x 10/70		(1,714)
P $12,000 x 30/70			(5,143)
Q $12,000 x 30/ 70				(5,143)
Capital after distribution of N’s deficit	0	64,286	42,857	(2,143)
Distribution of Q deficit				2,143
Q $2,143 x 10/40		(536)
P $2,143 x 30/40			(1607)
Capital after distribution of Q’s deficit	0	63,750	41,250	0
Payment to partners	0	(63,750)	(41,250)	0

c

To determine

Liquidation of partnership: Winding-up and liquidation of the partnership begin after its dissolution. The winding-up process includes the transactions necessary to liquidate the partnership, such as collection of receivables disposal of noncash assets, payment of partnership’s obligations and distribution of any remaining net balance to the partners, in cash according to their capital interests. If partnership agreement does not have any provisions on liquidation or any liquidation ratio or profits or loss ratio for distribution of remaining balance it is distributed using normal profit and loss ratio during partnership’s operation.

Requirement 3

the amount of cash each partner will receive when profit and loss sharing ratio is 3:1:2:4

c

Expert Solution

Answer to Problem 16.7E

When profit and loss sharing ratio for partners N, O, P, and Q, is 3:1:2:4 each partner will get payments as follows:

N - $0

O - $60,000

P - $45,000

Q - $0

Explanation of Solution

	N 30%	O 10%	P 20%	Q 40%
Capital balance at beginning	15,000	75,000	75,000	30,000
Loss on sale of asset $190,000 − 100,000 = $90,000	(27,000)	(9,000)	(18,000)	(36,000)
Balance after allocation of loss	(12,000)	66,000	57,000	(6,000)
Distribution of deficit of insolvent partner N, Q	12,000			6,000
O $18,000 x 10/30		(6,000)
P $12,000 x 20/30			(12,000)
Capital after distribution of N’s & Q’s deficit	0	60,000	45,000	0
Payment to partners	0	(60,000)	(45,000)	0

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Answer 4

Question

Chapter 16, Problem 16.7E

a

To determine

Liquidation of partnership: Winding-up and liquidation of the partnership begin after its dissolution. The winding-up process includes the transactions necessary to liquidate the partnership, such as collection of receivables disposal of noncash assets, payment of partnership’s obligations and distribution of any remaining net balance to the partners, in cash according to their capital interests. If partnership agreement does not have any provisions on liquidation or any liquidation ratio or profits or loss ratio for distribution of remaining balance it is distributed using normal profit and loss ratio during partnership’s operation.

Requirement 1

the amount of cash each partner will receive when profit and loss sharing ratio is 3:3:2:2

a

Expert Solution

Answer to Problem 16.7E

When profit and loss sharing ratio for partners N, O, P, and Q, is 3:3:2:2 each partner will get payments as follows:

N - $0

O - $42,857

P - $53,572

Q - $8,571

Explanation of Solution

	N 30%	O 30%	P 20%	Q 20%
Capital balance at beginning	15,000	75,000	75,000	30,000
Loss on sale of asset $190,000 − 100,000 = $90,000	(27,000)	(27,000)	(18,000)	(18,000)
Balance after allocation of loss	(12,000)	48,000	57,000	12,000
Distribution of deficit of insolvent partner N	12,000
O $12,000 x 30/70		(5,143)
P $12,000 x 20/70			(3.428)
Q $12,000 x 20/ 70				(3,429)
Capital after distribution of N’s deficit	0	42,857	53,572	8,571
Payment to partners	0	(42,857)	(53,572)	(8,571)

b

To determine

Liquidation of partnership: Winding-up and liquidation of the partnership begin after its dissolution. The winding-up process includes the transactions necessary to liquidate the partnership, such as collection of receivables disposal of noncash assets, payment of partnership’s obligations and distribution of any remaining net balance to the partners, in cash according to their capital interests. If partnership agreement does not have any provisions on liquidation or any liquidation ratio or profits or loss ratio for distribution of remaining balance it is distributed using normal profit and loss ratio during partnership’s operation.

Requirement 2

the amount of cash each partner will receive when profit and loss sharing ratio is 3:1:2:2

b

Expert Solution

Answer to Problem 16.7E

When profit and loss sharing ratio for partners N, O, P, and Q, is 3:1:2:2 each partner will get payments as follows:

N - $0

O - $63,750

P - $41,250

Q - $0

Explanation of Solution

	N 30%	O 10%	P 20%	Q 20%
Capital balance at beginning	15,000	75,000	75,000	30,000
Loss on sale of asset $190,000 − 100,000 = $90,000	(27,000)	(9,000)	(27,000)	(27,000)
Balance after allocation of loss	(12,000)	66,000	48,000	3,000
Distribution of deficit of insolvent partner N	12,000
O $12,000 x 10/70		(1,714)
P $12,000 x 30/70			(5,143)
Q $12,000 x 30/ 70				(5,143)
Capital after distribution of N’s deficit	0	64,286	42,857	(2,143)
Distribution of Q deficit				2,143
Q $2,143 x 10/40		(536)
P $2,143 x 30/40			(1607)
Capital after distribution of Q’s deficit	0	63,750	41,250	0
Payment to partners	0	(63,750)	(41,250)	0

c

To determine

Liquidation of partnership: Winding-up and liquidation of the partnership begin after its dissolution. The winding-up process includes the transactions necessary to liquidate the partnership, such as collection of receivables disposal of noncash assets, payment of partnership’s obligations and distribution of any remaining net balance to the partners, in cash according to their capital interests. If partnership agreement does not have any provisions on liquidation or any liquidation ratio or profits or loss ratio for distribution of remaining balance it is distributed using normal profit and loss ratio during partnership’s operation.

Requirement 3

the amount of cash each partner will receive when profit and loss sharing ratio is 3:1:2:4

c

Expert Solution

Answer to Problem 16.7E

When profit and loss sharing ratio for partners N, O, P, and Q, is 3:1:2:4 each partner will get payments as follows:

N - $0

O - $60,000

P - $45,000

Q - $0

Explanation of Solution

	N 30%	O 10%	P 20%	Q 40%
Capital balance at beginning	15,000	75,000	75,000	30,000
Loss on sale of asset $190,000 − 100,000 = $90,000	(27,000)	(9,000)	(18,000)	(36,000)
Balance after allocation of loss	(12,000)	66,000	57,000	(6,000)
Distribution of deficit of insolvent partner N, Q	12,000			6,000
O $18,000 x 10/30		(6,000)
P $12,000 x 20/30			(12,000)
Capital after distribution of N’s & Q’s deficit	0	60,000	45,000	0
Payment to partners	0	(60,000)	(45,000)	0

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Answer 5

Chapter 16, Problem 16.7E

a

To determine

Liquidation of partnership: Winding-up and liquidation of the partnership begin after its dissolution. The winding-up process includes the transactions necessary to liquidate the partnership, such as collection of receivables disposal of noncash assets, payment of partnership’s obligations and distribution of any remaining net balance to the partners, in cash according to their capital interests. If partnership agreement does not have any provisions on liquidation or any liquidation ratio or profits or loss ratio for distribution of remaining balance it is distributed using normal profit and loss ratio during partnership’s operation.

Requirement 1

the amount of cash each partner will receive when profit and loss sharing ratio is 3:3:2:2

a

Expert Solution

Answer to Problem 16.7E

When profit and loss sharing ratio for partners N, O, P, and Q, is 3:3:2:2 each partner will get payments as follows:

N - $0

O - $42,857

P - $53,572

Q - $8,571

Explanation of Solution

	N 30%	O 30%	P 20%	Q 20%
Capital balance at beginning	15,000	75,000	75,000	30,000
Loss on sale of asset $190,000 − 100,000 = $90,000	(27,000)	(27,000)	(18,000)	(18,000)
Balance after allocation of loss	(12,000)	48,000	57,000	12,000
Distribution of deficit of insolvent partner N	12,000
O $12,000 x 30/70		(5,143)
P $12,000 x 20/70			(3.428)
Q $12,000 x 20/ 70				(3,429)
Capital after distribution of N’s deficit	0	42,857	53,572	8,571
Payment to partners	0	(42,857)	(53,572)	(8,571)

b

To determine

Liquidation of partnership: Winding-up and liquidation of the partnership begin after its dissolution. The winding-up process includes the transactions necessary to liquidate the partnership, such as collection of receivables disposal of noncash assets, payment of partnership’s obligations and distribution of any remaining net balance to the partners, in cash according to their capital interests. If partnership agreement does not have any provisions on liquidation or any liquidation ratio or profits or loss ratio for distribution of remaining balance it is distributed using normal profit and loss ratio during partnership’s operation.

Requirement 2

the amount of cash each partner will receive when profit and loss sharing ratio is 3:1:2:2

b

Expert Solution

Answer to Problem 16.7E

When profit and loss sharing ratio for partners N, O, P, and Q, is 3:1:2:2 each partner will get payments as follows:

N - $0

O - $63,750

P - $41,250

Q - $0

Explanation of Solution

	N 30%	O 10%	P 20%	Q 20%
Capital balance at beginning	15,000	75,000	75,000	30,000
Loss on sale of asset $190,000 − 100,000 = $90,000	(27,000)	(9,000)	(27,000)	(27,000)
Balance after allocation of loss	(12,000)	66,000	48,000	3,000
Distribution of deficit of insolvent partner N	12,000
O $12,000 x 10/70		(1,714)
P $12,000 x 30/70			(5,143)
Q $12,000 x 30/ 70				(5,143)
Capital after distribution of N’s deficit	0	64,286	42,857	(2,143)
Distribution of Q deficit				2,143
Q $2,143 x 10/40		(536)
P $2,143 x 30/40			(1607)
Capital after distribution of Q’s deficit	0	63,750	41,250	0
Payment to partners	0	(63,750)	(41,250)	0

c

To determine

Liquidation of partnership: Winding-up and liquidation of the partnership begin after its dissolution. The winding-up process includes the transactions necessary to liquidate the partnership, such as collection of receivables disposal of noncash assets, payment of partnership’s obligations and distribution of any remaining net balance to the partners, in cash according to their capital interests. If partnership agreement does not have any provisions on liquidation or any liquidation ratio or profits or loss ratio for distribution of remaining balance it is distributed using normal profit and loss ratio during partnership’s operation.

Requirement 3

the amount of cash each partner will receive when profit and loss sharing ratio is 3:1:2:4

c

Expert Solution

Answer to Problem 16.7E

When profit and loss sharing ratio for partners N, O, P, and Q, is 3:1:2:4 each partner will get payments as follows:

N - $0

O - $60,000

P - $45,000

Q - $0

Explanation of Solution

	N 30%	O 10%	P 20%	Q 40%
Capital balance at beginning	15,000	75,000	75,000	30,000
Loss on sale of asset $190,000 − 100,000 = $90,000	(27,000)	(9,000)	(18,000)	(36,000)
Balance after allocation of loss	(12,000)	66,000	57,000	(6,000)
Distribution of deficit of insolvent partner N, Q	12,000			6,000
O $18,000 x 10/30		(6,000)
P $12,000 x 20/30			(12,000)
Capital after distribution of N’s & Q’s deficit	0	60,000	45,000	0
Payment to partners	0	(60,000)	(45,000)	0

Answer 6

Chapter 16, Problem 16.7E

a

To determine

Liquidation of partnership: Winding-up and liquidation of the partnership begin after its dissolution. The winding-up process includes the transactions necessary to liquidate the partnership, such as collection of receivables disposal of noncash assets, payment of partnership’s obligations and distribution of any remaining net balance to the partners, in cash according to their capital interests. If partnership agreement does not have any provisions on liquidation or any liquidation ratio or profits or loss ratio for distribution of remaining balance it is distributed using normal profit and loss ratio during partnership’s operation.

Requirement 1

the amount of cash each partner will receive when profit and loss sharing ratio is 3:3:2:2

a

Expert Solution

Answer to Problem 16.7E

When profit and loss sharing ratio for partners N, O, P, and Q, is 3:3:2:2 each partner will get payments as follows:

N - $0

O - $42,857

P - $53,572

Q - $8,571

Explanation of Solution

	N 30%	O 30%	P 20%	Q 20%
Capital balance at beginning	15,000	75,000	75,000	30,000
Loss on sale of asset $190,000 − 100,000 = $90,000	(27,000)	(27,000)	(18,000)	(18,000)
Balance after allocation of loss	(12,000)	48,000	57,000	12,000
Distribution of deficit of insolvent partner N	12,000
O $12,000 x 30/70		(5,143)
P $12,000 x 20/70			(3.428)
Q $12,000 x 20/ 70				(3,429)
Capital after distribution of N’s deficit	0	42,857	53,572	8,571
Payment to partners	0	(42,857)	(53,572)	(8,571)

Answer 7

Chapter 16, Problem 16.7E

a

To determine

Liquidation of partnership: Winding-up and liquidation of the partnership begin after its dissolution. The winding-up process includes the transactions necessary to liquidate the partnership, such as collection of receivables disposal of noncash assets, payment of partnership’s obligations and distribution of any remaining net balance to the partners, in cash according to their capital interests. If partnership agreement does not have any provisions on liquidation or any liquidation ratio or profits or loss ratio for distribution of remaining balance it is distributed using normal profit and loss ratio during partnership’s operation.

Requirement 1

the amount of cash each partner will receive when profit and loss sharing ratio is 3:3:2:2

Answer 8

a

Expert Solution

Answer to Problem 16.7E

When profit and loss sharing ratio for partners N, O, P, and Q, is 3:3:2:2 each partner will get payments as follows:

N - $0

O - $42,857

P - $53,572

Q - $8,571

Answer 9

a

Expert Solution

Answer 10

a

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

	N 30%	O 30%	P 20%	Q 20%
Capital balance at beginning	15,000	75,000	75,000	30,000
Loss on sale of asset $190,000 − 100,000 = $90,000	(27,000)	(27,000)	(18,000)	(18,000)
Balance after allocation of loss	(12,000)	48,000	57,000	12,000
Distribution of deficit of insolvent partner N	12,000
O $12,000 x 30/70		(5,143)
P $12,000 x 20/70			(3.428)
Q $12,000 x 20/ 70				(3,429)
Capital after distribution of N’s deficit	0	42,857	53,572	8,571
Payment to partners	0	(42,857)	(53,572)	(8,571)

Answer 13

b

To determine

Liquidation of partnership: Winding-up and liquidation of the partnership begin after its dissolution. The winding-up process includes the transactions necessary to liquidate the partnership, such as collection of receivables disposal of noncash assets, payment of partnership’s obligations and distribution of any remaining net balance to the partners, in cash according to their capital interests. If partnership agreement does not have any provisions on liquidation or any liquidation ratio or profits or loss ratio for distribution of remaining balance it is distributed using normal profit and loss ratio during partnership’s operation.

Requirement 2

the amount of cash each partner will receive when profit and loss sharing ratio is 3:1:2:2

b

Expert Solution

Answer to Problem 16.7E

When profit and loss sharing ratio for partners N, O, P, and Q, is 3:1:2:2 each partner will get payments as follows:

N - $0

O - $63,750

P - $41,250

Q - $0

Explanation of Solution

	N 30%	O 10%	P 20%	Q 20%
Capital balance at beginning	15,000	75,000	75,000	30,000
Loss on sale of asset $190,000 − 100,000 = $90,000	(27,000)	(9,000)	(27,000)	(27,000)
Balance after allocation of loss	(12,000)	66,000	48,000	3,000
Distribution of deficit of insolvent partner N	12,000
O $12,000 x 10/70		(1,714)
P $12,000 x 30/70			(5,143)
Q $12,000 x 30/ 70				(5,143)
Capital after distribution of N’s deficit	0	64,286	42,857	(2,143)
Distribution of Q deficit				2,143
Q $2,143 x 10/40		(536)
P $2,143 x 30/40			(1607)
Capital after distribution of Q’s deficit	0	63,750	41,250	0
Payment to partners	0	(63,750)	(41,250)	0

Answer 14

b

To determine

Liquidation of partnership: Winding-up and liquidation of the partnership begin after its dissolution. The winding-up process includes the transactions necessary to liquidate the partnership, such as collection of receivables disposal of noncash assets, payment of partnership’s obligations and distribution of any remaining net balance to the partners, in cash according to their capital interests. If partnership agreement does not have any provisions on liquidation or any liquidation ratio or profits or loss ratio for distribution of remaining balance it is distributed using normal profit and loss ratio during partnership’s operation.

Requirement 2

the amount of cash each partner will receive when profit and loss sharing ratio is 3:1:2:2

Answer 15

b

Expert Solution

Answer to Problem 16.7E

When profit and loss sharing ratio for partners N, O, P, and Q, is 3:1:2:2 each partner will get payments as follows:

N - $0

O - $63,750

P - $41,250

Q - $0

Answer 16

b

Expert Solution

Answer 17

b

Expert Solution

Answer 18

Expert Solution

Answer 19

Explanation of Solution

	N 30%	O 10%	P 20%	Q 20%
Capital balance at beginning	15,000	75,000	75,000	30,000
Loss on sale of asset $190,000 − 100,000 = $90,000	(27,000)	(9,000)	(27,000)	(27,000)
Balance after allocation of loss	(12,000)	66,000	48,000	3,000
Distribution of deficit of insolvent partner N	12,000
O $12,000 x 10/70		(1,714)
P $12,000 x 30/70			(5,143)
Q $12,000 x 30/ 70				(5,143)
Capital after distribution of N’s deficit	0	64,286	42,857	(2,143)
Distribution of Q deficit				2,143
Q $2,143 x 10/40		(536)
P $2,143 x 30/40			(1607)
Capital after distribution of Q’s deficit	0	63,750	41,250	0
Payment to partners	0	(63,750)	(41,250)	0

Answer 20

c

To determine

Liquidation of partnership: Winding-up and liquidation of the partnership begin after its dissolution. The winding-up process includes the transactions necessary to liquidate the partnership, such as collection of receivables disposal of noncash assets, payment of partnership’s obligations and distribution of any remaining net balance to the partners, in cash according to their capital interests. If partnership agreement does not have any provisions on liquidation or any liquidation ratio or profits or loss ratio for distribution of remaining balance it is distributed using normal profit and loss ratio during partnership’s operation.

Requirement 3

the amount of cash each partner will receive when profit and loss sharing ratio is 3:1:2:4

c

Expert Solution

Answer to Problem 16.7E

When profit and loss sharing ratio for partners N, O, P, and Q, is 3:1:2:4 each partner will get payments as follows:

N - $0

O - $60,000

P - $45,000

Q - $0

Explanation of Solution

	N 30%	O 10%	P 20%	Q 40%
Capital balance at beginning	15,000	75,000	75,000	30,000
Loss on sale of asset $190,000 − 100,000 = $90,000	(27,000)	(9,000)	(18,000)	(36,000)
Balance after allocation of loss	(12,000)	66,000	57,000	(6,000)
Distribution of deficit of insolvent partner N, Q	12,000			6,000
O $18,000 x 10/30		(6,000)
P $12,000 x 20/30			(12,000)
Capital after distribution of N’s & Q’s deficit	0	60,000	45,000	0
Payment to partners	0	(60,000)	(45,000)	0

Answer 21

c

To determine

Liquidation of partnership: Winding-up and liquidation of the partnership begin after its dissolution. The winding-up process includes the transactions necessary to liquidate the partnership, such as collection of receivables disposal of noncash assets, payment of partnership’s obligations and distribution of any remaining net balance to the partners, in cash according to their capital interests. If partnership agreement does not have any provisions on liquidation or any liquidation ratio or profits or loss ratio for distribution of remaining balance it is distributed using normal profit and loss ratio during partnership’s operation.

Requirement 3

the amount of cash each partner will receive when profit and loss sharing ratio is 3:1:2:4

Answer 22

c

Expert Solution

Answer to Problem 16.7E

When profit and loss sharing ratio for partners N, O, P, and Q, is 3:1:2:4 each partner will get payments as follows:

N - $0

O - $60,000

P - $45,000

Q - $0

Answer 23

c

Expert Solution

Answer 24

c

Expert Solution

Answer 25

Expert Solution

Answer 26

Explanation of Solution

	N 30%	O 10%	P 20%	Q 40%
Capital balance at beginning	15,000	75,000	75,000	30,000
Loss on sale of asset $190,000 − 100,000 = $90,000	(27,000)	(9,000)	(18,000)	(36,000)
Balance after allocation of loss	(12,000)	66,000	57,000	(6,000)
Distribution of deficit of insolvent partner N, Q	12,000			6,000
O $18,000 x 10/30		(6,000)
P $12,000 x 20/30			(12,000)
Capital after distribution of N’s & Q’s deficit	0	60,000	45,000	0
Payment to partners	0	(60,000)	(45,000)	0

Answer 27

Ch. 16 - What are the major causes of a dissolution? What...Ch. 16 - Prob. 16.2Q Ch. 16 - Prob. 16.3Q Ch. 16 - Prob. 16.4Q Ch. 16 - Contrast a lump-sum liquidation with an...Ch. 16 - Prob. 16.6Q Ch. 16 - Prob. 16.7Q Ch. 16 - Prob. 16.8Q Ch. 16 - Prob. 16.9Q Ch. 16 - Prob. 16.10Q

Concept explainers

Answer to Problem 16.7E

Explanation of Solution

Answer to Problem 16.7E

Explanation of Solution

Answer to Problem 16.7E

Explanation of Solution

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