Requirement a: Compute safe cash payments as follows: | |||
Particulars | Partner H | Partner S | Partner W |
Capital balances - Beginning | $96,000 | $45,000 | $16,000 |
Less: Liquidation expenses | |||
Partner H ($12,000 × 3 ÷ 6) | ($6,000) | ||
Partner S ($12,000 × 2 ÷ 6) | ($4,000) | ||
Partner W ($12,000 × 1 ÷ 6) | ($2,000) | ||
Less: Loss on sale of assets $111,000 ($227,000 − $116,000) | |||
Partner H ($111,000 × 3 ÷ 6) | ($55,500) | ||
Partner S ($111,000 × 2 ÷ 6) | ($37,000) | ||
Partner W ($111,000 × 1 ÷ 6) | ($18,500) | ||
Capital balances after adjusting for expenses and losses | $34,500 | $4,000 | ($4,500) |
Less: Partner W deficit balance apportioned | |||
Partner H ($4,500 × 3 ÷ 5) | ($2,700) | $2,700 | |
Partner S ($4,500 × 2 ÷ 5) | ($1,800) | $1,800 | |
Safe cash payments | $31,800 | $2,200 | $0 |
Requirement b: Prepare journal entries as follows | |||
Item | Account Title and Explanation | Debit | Credit |
1 | Cash | $116,000 | |
Capital -Partner H | $55,500 | ||
Capital -Partner S | $37,000 | ||
Capital -Partner W | $18,500 | ||
Noncash assets | $227,000 | ||
To record sale of noncash assets and allocation of loss on sale | |||
2 | Capital -Partner H | $6,000 | |
Capital -Partner S | $4,000 | ||
Capital -Partner W | $2,000 | ||
Cash | $12,000 | ||
To record liquidation expenses | |||
3 | Liabilities | $80,000 | |
Cash | $80,000 | ||
To record payment of liabilities | |||
4 | Capital -Partner H | $2,700 | |
Capital -Partner S | $1,800 | ||
Capital -Partner W | $4,500 | ||
To record distribution of the capital loss of Partner W | |||
5 | Capital -Partner H | $31,800 | |
Capital -Partner S | $2,200 | ||
Cash | $34,000 | ||
To record distribution of safe payments |
Hardin, Sutton, and Williams have operated a local business as a partnership for several years. All...
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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...
Problem 10-21 (LO 10-2, 10-4) 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 $5,500. At the date the partnership ceases operations, the balance sheet is as follows: Cash Noncash assets $ 48,000 135,000 Liabilities Alex, capital Bess, capital Total liabilities and capital $ 30,000 94,500 52,500 $ 183,000 Total assets...
Problem 10-21 (LO 10-2, 10-4) 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 $5,500. At the date the partnership ceases operations, the balance sheet is as follows: Cash Noncash assets $ 48,000 135,000 Liabilities Alex, capital Bess, capital Total liabilities and capital $ 30,000 94,500 52,500 $ 183,000 Total assets...
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The partnership of Frick, Wilson, and Clarke has elected to cease all operations and liquidate its business property. A balance sheet drawn up at this time shows the following account balances: Cash $ 71,000 Liabilities $ 39,000 Noncash assets 291,000 Frick, capital (60%) 177,000 Wilson, capital (20%) 47,000 Clarke, capital (20%) 99,000 Total assets $ 362,000 Total liabilities and capital $ 362,000 Part A Prepare a predistribution plan for this partnership Part B The following transactions occur in liquidating this...