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After closing the accounts on July 1, prior to liquidating the partnership, the capital account balances...

  1. After closing the accounts on July 1, prior to liquidating the partnership, the capital account balances of Gold, Porter, and Sims are $30,000, $42,900, and $18,900, respectively. Cash, noncash assets, and liabilities total $49,200, $79,200, and $36,600, respectively. Between July 1 and July 29, the noncash assets are sold for $63,600, the liabilities are paid, and the remaining cash is distributed to the partners. The partners share net income and loss in the ratio of 3:2:1.

    Prepare a statement of partnership liquidation for the period July 1-29. Enter any subtractions (balance deficiencies, payments, cash distributions, divisions of loss, sale of assets) as negative numbers using a minus sign. If an amount is zero, enter in "0".

    Gold, Porter, and Sims
    Statement of Partnership Liquidation
    For the Period Ending July 1-29
    Cash + Noncash Assets = Liabilities + Capital Gold (3/6) + Capital Porter (2/6) + Capital Sims (1/6)
    Balances before realization $ $ $ $ $ $
    Sale of assets and division of loss +
    Balances after realization $ $ $ $ $ $
    Payment of liabilities
    Balances after payment of liabilities $ $ $ $ $ $
    Cash distributed to partners
    Final balances $ $ $ $ $ $
  2. Statement of LLC Liquidation

    Lester, Torres, and Hearst are members of Arcadia Sales, LLC, sharing income and losses in the ratio of 2:2:1, respectively. The members decide to liquidate the limited liability company. The members' equity prior to liquidation and asset realization on August 1 are as follows:

    Lester $27,200
    Torres 63,000
    Hearst 39,100
    Total $129,300

    In winding up operations during the month of August, noncash assets with a book value of $170,200 are sold for $211,000, and liabilities of $56,700 are satisfied. Prior to realization, Arcadia Sales has a cash balance of $15,800.

    a. Prepare a statement of LLC liquidation. Enter any subtractions (balance deficiencies, payments, cash distributions, divisions of loss, sale of assets) as negative numbers using a minus sign. If an amount is zero, enter "0".

    Arcadia Sales, LLC
    Statement of LLC Liquidation
    For the Period August 1-31



    Cash +


    Noncash
    Assets =



    Liabilities +
    Member
    Equity
    Lester (2/5) +
    Member
    Equity
    Torres (2/5) +
    Member
    Equity
    Hearst (1/5)
    Balances before realization $ $ $ $ $ $
    Sale of assets and division of gain + + + +
    Balances after realization $ $ $ $ $ $
    Payment of liabilities
    Balances after payment of liabilities $ $ $ $ $ $
    Distribution of cash to members
    Final balances $ $ $ $ $ $

    b. Provide the journal entry for the final cash distribution to members. For a compound transaction, if an amount box does not require an entry, leave it blank.

    c. What is the role of the income- and loss-sharing ratio in liquidating a LLC?

    The income- and loss-sharing ratio is only used to ___  on the realization of asset sales. It ___ used for the final distribution.

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Answer #1
1
Statement of Partnership Liquidation
For the Period July 1-29
Cash Noncash Assets Liabilities Gold (3/6) Porter (2/6) Sims (1/6)
Balances before realization 49200 79200 36600 30000 42900 18900
Sale of assets and division of loss 63600 -79200 0 -7800 -5200 -2600
Balances after realization 112800 0 36600 22200 37700 16300
Payment of liabilities -36600 0 -36600 0 0 0
Balances after payment of liabilities 76200 0 0 22200 37700 16300
Cash distributed to partners -76200 0 0 -22200 -37700 -16300
Final balances 0 0 0 0 0 0
2
a
Statement of LLC Liquidation
For the Period August 1-31
Cash Noncash Assets Liabilities Lester (2/5) Torres(2/5) Hearst(1/5)
Balances before realization 15800 170200 56700 27200 63000 39100
Sale of assets and division of gain 211000 -170200 0 16320 16320 8160
Balances after realization 226800 0 56700 43520 79320 47260
Payment of liabilities -56700 0 -56700 0 0 0
Balances after payment of liabilities 170100 0 0 43520 79320 47260
Distribution of cash to members -170100 0 0 -43520 -79320 -47260
Final balances 0 0 0 0 0 0
b
Lester, Member Equity 43520
Torres, Member Equity 79320
Hearst, Member Equity 47260
       Cash 170100
c
The income- and loss-sharing ratio is only used to distribute the gain or loss on the realization of asset sales. It is not used for the final distribution.
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