A partnership is considering possible liquidation because one of the partners (Bell) is personally insolvent. Profits and losses are divided on a 4:3:2:1 basis, respectively. Capital balances at the current time are
Bell, capital | $ | 83,500 |
Hardy, capital | 69,000 | |
Dennard, capital | 16,000 | |
Suddath, capital | 93,000 | |
Bell’s creditors have filed a $34,000 claim against the partnership’s assets. The partnership currently holds assets of $430,000 and liabilities of $168,500. If the assets can be sold for $255,000, what is the minimum amount that Bell’s creditors would receive?
Carney, Pierce, Menton, and Hoehn are partners who share profits and losses on a 4:3:2:1 basis, respectively. They are beginning to liquidate the business. At the start of this process, capital balances are
Carney, capital | $ | 78,000 |
Pierce, capital | 32,400 | |
Menton, capital | 61,000 | |
Hoehn, capital | 25,400 | |
Which of the following statements is true?
Multiple Choice
Carney will be the last partner to receive any available cash.
The first available $7,400 will go to Hoehn.
The first available $10,200 will go to Menton.
Carney will collect a portion of any available cash before Hoehn receives money.
1. Loss on sale of assets = $430000 - $255000
= $175000
Share of Bill = $175000*4/10
= $70000
Opening balance of Bill = $83500
After adjusting loss = $83500 - $70000
= $13500
Hence his creditors will receive minimum $13500.
2. Who will receive cash first will be decided on the basis of capital amount divided by ratio.
Carney = $78000/4 = $19500
Pierce = $32400/3 = $10800
Menton = $61000/2 = $30500
Hoehn = $25400/1= $25400
We have to make all capital per ratio equal , hence since Menton has the highest capital per ratio , he will first receive cash unless it becomes equivalent to hoehn.
= $30500 - $25400
= $5100 per ratio
Now we have to multiply it by ratio of monten
= $5100*2 = $10200
Hence after receiving $10200 , montens capital per ratio will become equal to hoehn.
So the answer is option C.
A partnership is considering possible liquidation because one of the partners (Bell) is personally insolvent. Profits...
A partnership is considering possible liquidation because one of the partners (Bell) is personally insolvent. Profits and losses are divided on a 4:3:2:1 basis, respectively. Capital balances at the current time are Bell, capital $ 70,000 Hardy, capital 64,000 Dennard, capital 12,000 Suddath, capital 88,000 Bell’s creditors have filed a $29,000 claim against the partnership’s assets. The partnership currently holds assets of $380,000 and liabilities of $146,000. If the assets can be sold for $230,000, what is the minimum amount...
A local partnership is considering possible liquidation because one of the partners (Bell) is insolvent. Capital balances at the current time are as follows. Profits and losses are divided on a 4:3:2:1 basis, respectively. Bell, capital $ 91,000 Hardy, capital 81,000 Dennard, capital 18,000 Suddath, capital 96,000 Bell’s creditors have filed a $37,000 claim against the partnership’s assets. The partnership currently holds assets reported at $460,000 and liabilities of $174,000. If the assets can be sold for $270,000, what is...
A partnership has the following capital balances: Arlo (50% of gains and losses) Band (30%) Carlyle (20%) $ 96,000 120,000 180,000 David is going to invest $105,000 Into the business to acquire a 30 percent ownership Interest. Goodwill is to be recorded. What will be David's beginning capital balance? $150,300 $169,714 $105,000 $118,800 A local partnership is considering possible liquidation because one of the partners (Bell) is insolvent. Capital balances at the current time are as follows. Profits and losses...
Partners Ute, Aggie, and Cougar share profits and losses in the ratio of 5:3:2, respectively. The partners voted to liquidate the partnership when its assets, liabilities, and capital were as follows: Cash $ 15,000 Liabilities from Outside Creditors $55,000 Loan from Aggie 15,000 Non-cash assets 95,000 Capital, Ute 22,000 Capital, Aggie 13,000 __________ Capital, Cougar 5,000 Total Assets $110,000 Total Liabilities & Equity $110,000 All the noncash assets of $95,000 were sold for $60,000. Cougar was personally insolvent and unable...
1. A partnership has the following account balances: Cash, $91,000; Other Assets, $645,000; Liabilities, $326,000; Nixon (50% of profits and losses), $185,000; Cleveland (30%), $135,000; Pierce (20%), $90,000. The company liquidates, and $18,500 becomes available to the partners. Who gets the $18,500? (Do not round intermediate calculations.) Nixon Cleveland pierce safe payments 2. The partnership of W, X, Y, and Z has the following balance sheet: Cash $ 52,000 Liabilities $ 66,000 Other assets 315,000 W, capital (50%...
Check my work Alex and Bess have been in partnership for many years. The partners, who share profits and losses on a 70:30 basis, respectively, wish to retire and have agreed to liquidate the business. Liquidation expenses are estimated to be $7,500. At the date the partnership ceases operations, the balance sheet is as follows: Cash Noncash assets $ 67,000 260,000 Liabilities Alex, capital Bess, capital Total liabilities and capital $ 48,500 182,000 96,500 $ 327,000 Total assets $ 327,000...
QS 12-9 Liquidation of partnership LO P5 [The following information applies to the questions displayed below.] The Field, Brown & Snow partnership was begun with investments by the partners as follows: Field, $130,500; Brown, $167,300; and Snow, $155,800. The partners decide to liquidate, sharing all losses equally. On May 31, after all assets were sold and all creditors were paid, only $48,300 in partnership cash remained. QS 12-9 Part 1 1. Compute the capital account balance of each partner...
Alex and Bess have been in partnership for many years. The partners, who share profits and losses on a 60:40 basis, respectively, wish to retire and have agreed to liquidate the business. Liquidation expenses are estimated to be $7,000. At the date the partnership ceases operations, the balance sheet is as follows: Cash Noncash assets $ 66,000 250,000 Liabilities Alex, capital Bess, capital Total liabilities and capital $ 48,000 150,000 118,000 $ 316,000 Total assets $ 316,000 Part A: Prepare...
On January 1, the partners of Van, Bakel, and Cox (who share profits and losses in the ratio of 5:3:2, respectively) decide to liquidate their partnership. The trial balance at this date follows: Debit Credit Cash $ 30,000 Accounts receivable 90,000 Inventory 76,000 Machinery and equipment, net 213,000 Van, loan 54,000 Accounts payable $ 81,000 Bakel, loan 44,000 Van, capital 150,000 Bakel, capital 102,000 Cox, capital 86,000 Totals $ 463,000 $ 463,000 The partners plan a program of piecemeal conversion...
Alex and Bess have been in partnership for many years. The partners, who share profits and losses on a 60: 40 basis, respectively, wish to retire and have agreed to liquidate the business. Liquidation expenses are estimated to be $6,500. At the date the partnership ceases operations, the balance sheet is as follows:Part A: Prepare journal entries for the following transactions:a. Distributed safe cash payments to the partners.b. Paid $24,900 of the partnership's liabilities.c. Sold noncash assets for $131,500.d. Distributed...