1. When a partnership is insolvent and a partner has a deficit capital
balance, that partner is legally required to:
2. The Abrams, Bartle, and Creighton partnership began the process of
liquidation with the following balance sheet:
Abrams, Bartle, and Creighton share profits and losses in a ratio of 3:2:5.
Liquidation expenses are expected to be $12,000.
If the noncash assets were sold for $234,000, what amount of the loss would
have been allocated to Bartle?
3. The Abrams, Bartle, and Creighton partnership began the process of
liquidation with the following balance sheet:
Abrams, Bartle, and Creighton share profits and losses in a ratio of 3:2:5.
Liquidation expenses are expected to be $12,000.
The noncash assets were sold for $134,000. Which partner(s) would have had to
contribute assets to the partnership to cover a deficit in his or her capital
account?
4. The Abrams, Bartle, and Creighton partnership began the process of
liquidation with the following balance sheet:
Abrams, Bartle, and Creighton share profits and losses in a ratio of 3:2:5.
Liquidation expenses are expected to be $12,000.
After the liquidation expenses of $12,000 were paid and the noncash assets sold,
Creighton had a deficit of $8,000. For what amount were the noncash assets
sold?
5. The Keaton, Lewis, and Meador partnership had the following balance
sheet just before entering liquidation:
Keaton, Lewis, and Meador share profits and losses in a ratio of 2:4:4. Noncash
assets were sold for $180,000. Liquidation expenses were $10,000.
Assume that Lewis was personally insolvent and could not contribute any assets
to the partnership, while Keaton and Meador were both solvent. What amount of
cash would Keaton have received from the distribution of partnership assets?
6. The Keaton, Lewis, and Meador partnership had the following balance
sheet just before entering liquidation:
Keaton, Lewis, and Meador share profits and losses in a ratio of 2:4:4. Noncash
assets were sold for $60,000. How much will each partner receive in the
liquidation?
7. The Keaton, Lewis, and Meador partnership had the following balance
sheet just before entering liquidation:
Keaton, Lewis, and Meador share profits and losses in a ratio of 2:4:4. The
partnership feels confident it will be able to eventually sell the noncash assets
and wants to distribute some cash before paying liabilities. How much would
each partner receive of a total $60,000 distribution of cash?
8. The Henry, Isaac, and Jacobs partnership was about to enter liquidation
with the following account balances:
Estimated expenses of liquidation were $5,000. Henry, Isaac, and Jacobs shared
profits and losses in a ratio of 2:4:4.
What amount of cash was available for safe payments, based on the above
information?
9. The Henry, Isaac, and Jacobs partnership was about to enter liquidation
with the following account balances:
Estimated expenses of liquidation were $5,000. Henry, Isaac, and Jacobs shared
profits and losses in a ratio of 2:4:4.
Before liquidating any assets, the partners determined the amount of cash
available for safe payments. How should the amount of safe cash payments be
distributed?
10. The Henry, Isaac, and Jacobs partnership was about to enter liquidation
with the following account balances:
Estimated expenses of liquidation were $5,000. Henry, Isaac, and Jacobs shared
profits and losses in a ratio of 2:4:4.
Before liquidating any assets, the partners determined the amount of cash for
safe payments and distributed it. The noncash assets were then sold for
$120,000. The liquidation expenses of $5,000 were paid. How much of the
$120,000 would be distributed to the partners? (Hint: Either a predistribution
plan or a schedule of safe payments would be appropriate for solving this item.)
11. The following account balances were available for the Perry, Quincy, and
Renquist partnership just before it entered liquidation:
Included in Perry’s capital balance is a $20,000 partnership loan owed to Perry.
Perry, Quincy, and Renquist shared profits and losses in a ratio of 2:4:4.
Liquidation expenses were expected to be $15,000.
All partners were solvent.
What amount would noncash assets need to be sold for in order for any partner
to receive some cash?
12. The following account balances were available for the Perry, Quincy, and
Renquist partnership just before it entered liquidation:
Included in Perry’s capital balance is a $20,000 partnership loan owed to Perry.
Perry, Quincy, and Renquist shared profits and losses in a ratio of 2:4:4.
Liquidation expenses were expected to be $15,000.
All partners were solvent.
What would be the minimum amount for which the noncash assets must have
been sold, in order for Quincy to receive some cash from the liquidation?
13. A local partnership was in the process of liquidating and reported the
following capital balances:
Douglass indicated that the $14,000 deficit would be covered by a forthcoming
contribution. However, the two remaining partners asked to receive the $31,000
that was then in the cash account.
How much of this money should Justice receive?
14. A local partnership was in the process of liquidating and reported the
following capital balances:
Douglass indicated that the $14,000 deficit would be covered by a forthcoming
contribution. However, the two remaining partners asked to receive the $31,000
that was then in the cash account.
How much of this money should Zobart receive?
15. A local partnership was considering the possibility of liquidation since one
of the partners (Ding) was personally insolvent. Capital balances at that time
were as follows. Profits and losses were divided on a 4:2:2:2 basis, respectively.
Creditors of partner Ding filed a $25,000 claim against the partnership’s assets.
At that time, the partnership held noncash assets reported at $360,000 and
liabilities of $120,000. There was no cash on hand at the time.
If the assets could be sold for $228,000, what is the minimum amount that Ding’s
creditors would have received?
16. A local partnership was considering the possibility of liquidation since one
of the partners (Ding) was personally insolvent. Capital balances at that time
were as follows. Profits and losses were divided on a 4:2:2:2 basis, respectively.
Creditors of partner Ding filed a $25,000 claim against the partnership’s assets.
At that time, the partnership held noncash assets reported at $360,000 and
liabilities of $120,000. There was no cash on hand at the time.
If the assets could be sold for $228,000, what is the minimum amount that
Laurel’s creditors would have received?
17. A local partnership was considering the possibility of liquidation since one
of the partners (Ding) was personally insolvent. Capital balances at that time
were as follows. Profits and losses were divided on a 4:2:2:2 basis, respectively.
Creditors of partner Ding filed a $25,000 claim against the partnership’s assets.
At that time, the partnership held noncash assets reported at $360,000 and
liabilities of $120,000. There was no cash on hand at the time.
If the assets could be sold for $228,000, what is the minimum amount that
Ezzard’s creditors would have received?
18. A local partnership was considering the possibility of liquidation since one
of the partners (Ding) was personally insolvent. Capital balances at that time
were as follows. Profits and losses were divided on a 4:2:2:2 basis, respectively.
Creditors of partner Ding filed a $25,000 claim against the partnership’s assets.
At that time, the partnership held noncash assets reported at $360,000 and
liabilities of $120,000. There was no cash on hand at the time.
If the assets could be sold, for $228,000 what is the minimum amount that
Tillman’s creditors would have received?
19. Dancey, Reese, Newman, and Jahn were partners who shared profits and
losses on a 4:2:2:2 basis, respectively. They were beginning to liquidate their
business. At the start of the process, capital balances were as follows:
Which one of the following statements is true for a predistribution plan?
20. Dancey, Reese, Newman, and Jahn were partners who shared profits and
losses on a 4:2:2:2 basis, respectively. They were beginning to liquidate their
business. At the start of the process, capital balances were as follows:
Which one of the following statements is true for a predistribution plan?