Question

Abe, Barr, and Cane are in the process of liquidating their partnership. Since it may take several months to convert the othe

0 0
Add a comment Improve this question Transcribed image text
Answer #1

Answer: At the time of liquidation of partnership firm, at first the outside liabilities of the partnership firm is settled and then if any cash remains then it is distributed amongst partners in their capital ratio.

In the given question, the available cash is $400,000 whereas the Accounts payable are of $200,000, hence at first these accounts payable would be settled from cash.

Therefore, cash remaining after settling accounts payable is $200,000 ($400,000 - $200,000).

As mentioned in question $10,000 would be set aside for contingent expenses.

Hence the cash available for distribution amongst partners is $190,000 ($200,000 - $10,000) which would be distributed amongst parner's capital ratio.

The capital of Abe, Barr and Cane is $135,000, $216,000 and $49,000 respectively. Therefore, the capital ratio of Abe, Barr and Cane is 135 : 216 : 49.

Therefore the share of Barr is 216/400 (135+216+49).

The amount of cash Barr should receive is:

= ($190,000 * 216)/400 = $102,600.

Therefore, Barr should receive $102,600 in the first distribution.

Add a comment
Know the answer?
Add Answer to:
Abe, Barr, and Cane are in the process of liquidating their partnership. Since it may take...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • 3. Abe, Barr, and Cane are in the process of liquidating their partnership. Since it may...

    3. Abe, Barr, and Cane are in the process of liquidating their partnership. Since it may take several months to convert the other assets into cash, the partners agree to distribute all available cash immediately, except for $10,000 that is set aside for contingent expenses. The balance sheet and residual profit and loss sharing percentages are as follows: Cash Other assets $400,000 200.000 Accounts payable Abe, capital (40%) Barr, capital (30%) Cane, capital (30%) Total liablequity $200,000 135,000 216,000 49,000...

  • Use the following information for questions 1 and 2. On June 30, 2020, the Warls, Xin,...

    Use the following information for questions 1 and 2. On June 30, 2020, the Warls, Xin, and Yates partnership had the following fiscal year-end balance sheet: Cash $ 4,000 Accounts payable $ 7,000 Accounts receivable 6,000 Loan from Xin 5,000 Inventory 14,000 Warle, capital(20%) 14,000 Plant assets-net 12,000 Xin, capital(30%) 10,000 Loan to Warls 6.000 Yates, capital(50%) 6,000 Total assets 42,000 Total liab,/equity $ 42,000 The percentages shown are the residual profit and loss sharing ratios. The partners dissolved the...

  • SELECT THE BEST ANSWERS (Shows computations and references are required) Use the following information to answer...

    SELECT THE BEST ANSWERS (Shows computations and references are required) Use the following information to answer the question(s) below. Lola, Melvin, and Nettie are in the process of liquidating their partnership. Since it may take several months to convert the other assets into cash, the partners agree to distribute all available cash immediately, except for $12,000 that is set aside for contingent expenses. The balance sheet and residual profit and loss sharing percentages are as follows: $ Cash Other assets...

  • The VWX Partnership is undergoing an installment liquidation. Partners Victor, Whitney and Xavier share income in...

    The VWX Partnership is undergoing an installment liquidation. Partners Victor, Whitney and Xavier share income in a 3:5:2 ratio. The partnership balance sheet is as follows: Assets Cash - 7,000 AR - 10,000 Loan Rcvable (Victor) - 13,000 Inventory - 25,000 Buildings and equipment, net - 545,000 TOTAL ASSETS - 600,000 Liabilities AP - 20,000 Loan Payable (Whitney) - 50,000 TOTAL LIABILITIES - 70,000 Capital Victor - 100,000 Whitney - 250,000 Xavier - 180,000 TOTAL CAPITAL - 530,000 Your are...

  • Ernie and Bert agree to form a partnership. Because the two are great friends, no written partnership agreement...

    Ernie and Bert agree to form a partnership. Because the two are great friends, no written partnership agreement is made. Ernie agrees to contribute $100,000 in assets and to devote half of his time to the partnership. Bert is to contribute $40,000 in assets and to devote all of his time to running the operations of the partnership. Ernie and Bert will divide any net income or net loss in the following ratio (respectively): O 5:2 10:4 O 1:1 O...

  • Statement of Partnership Liquidation After closing the accounts on July 1, prior to liquidating the partnership,...

    Statement of Partnership Liquidation After closing the accounts on July 1, prior to liquidating the partnership, the capital account balances of Gold, Porter, and Sims are $36,600, $52,200, and $23,100, respectively. Cash, noncash assets, and liabilities total $55,200, $96,600, and $39,900, respectively. Between July 1 and July 29, the noncash assets are sold for $77,400, 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....

  • After the accounts are closed in February 3, prior to liquidating the partnership, the Capital account's...

    After the accounts are closed in February 3, prior to liquidating the partnership, the Capital account's oof William Gerloff, Joshua Chu, and Courney Jewett are $19,180, $4,020, and $22,140, respectively. cash and noncash assests total $5,600 and $54,240, repectively. amounts owed to creditors total $14,500. the partners shares income and losses in the ratio of 2:1:1. between February 3 and February 28, the noncash assets are sold for $34,560, the partner with the Capital deficiency pays the deficiency to the...

  • Statement of Partnership Liquidation After the accounts are closed on April 10, prior to liquidating the...

    Statement of Partnership Liquidation After the accounts are closed on April 10, prior to liquidating the partnership, the capital accounts of Zach Fairchild, Austin Lowes, and Amber Howard are $38,200, $6,900, and $31,200, respectively. Cash and noncash assets total $9,600 and $76,700, respectively. Amounts owed to creditors total $10,000. The partners share income and losses in the ratio of 1:1:2. Between April 10 and April 30, the noncash assets are sold for $40,700, the partner with the capital deficiency pays...

  • Statement of Partnership Liquidation After the accounts are closed on April 10, prior to liquidating the...

    Statement of Partnership Liquidation After the accounts are closed on April 10, prior to liquidating the partnership, the capital accounts of Zach Fairchild, Austin Lowes, and Amber Howard are $38,200, $6,900, and $31,200, respectively. Cash and noncash assets total $9,600 and $76,700, respectively. Amounts owed to creditors total $10,000. The partners share income and losses in the ratio of 1:1:2. Between April 10 and April 30, the noncash assets are sold for $40,700, the partner with the capital deficiency pays...

  • Part I. (12 points). Use the following information for questions 1 and 2. On June 30,...

    Part I. (12 points). Use the following information for questions 1 and 2. On June 30, 2020, the Warle. Xin, and Yates partnership had the following fiscal year-end balance sheet: Cash Accounts receivable Inventory Plant assets-net Loan to Warle. Total assets $ 4.000 6,000 14,000 12,000 6,000 $_42.000 Accounts payable Loan from Xin Warle, capital(20%) Xin, capital (30%) Yates, capital (50%) Total ljab./equity $ 7,000 5,000 14,000 10,000 6,000 $_42.000 The percentages shown are the residual profit and loss sharing...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT