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 | $ | $ | $ | $ | $ | $ |
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.
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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