21. Which of the following
could
result in the termination and liquidation of a
partnership?
1) Partners are incompatible and choose to cease operations.
2) There are excessive losses that are expected to continue.
3) Retirement of a partner.
22. What accounting transactions are
not
recorded by an accountant during
partnership liquidation?
23. Which of the following statements is
false
concerning the partnership
Schedule of Liquidation
?
24. What is the preferred method of resolving a partner’s deficit balance,
according to the
Uniform Partnership Act
?
25. Which of the following statements is true concerning the distribution of
safe payments?
26. Which one of the following statements is correct?
27. Which item is
not
shown on the schedule of partnership liquidation?
28. Harding, Jones, and Sandy is in the process of liquidating and the partners
have the following capital balances; $24,000, $24,000, and ($9,000) respectively.
The partners share all profits and losses 16%, 48%, and 36%, respectively. Sandy
has indicated that the ($9,000) deficit will be covered with a forthcoming
contribution. The remaining partners have requested to immediately receive
$20,000 in cash that is available. How should this cash be distributed?
29. Gonda, Herron, and Morse is considering possible liquidation because
partner Morse is personally insolvent. The partners have the following capital
balances: $60,000, $70,000, and $40,000, respectively, and share profits and
losses 30%, 45%, and 25%, respectively. The partnership has $200,000 in
noncash assets that can be sold for $150,000. The partnership has $10,000 cash
on hand, and $40,000 in liabilities. What is the minimum that partner Morse’s
creditors would receive if they have filed a claim for $50,000?
30. White, Sands, and Luke has the following capital balances and profit and
loss ratios:
$60,000 (30%); $100,000 (20%); and $200,000 (50%).
The partnership has received a predistribution plan.
How would $90,000 be distributed?
31. White, Sands, and Luke has the following capital balances and profit and
loss ratios:
$60,000 (30%); $100,000 (20%); and $200,000 (50%).
The partnership has received a predistribution plan.
How would $200,000 be distributed?
32. A local partnership has assets of cash of $5,000 and a building recorded at
$80,000. All liabilities have been paid. The partners’ capital accounts are as
follows Harry $40,000, Landers $30,000 and Waters 15,000. The partners share
profits and losses 4:4:2.
If the building is sold for $50,000, how much cash will Harry receive in the final
settlement?
33. A local partnership has assets of cash of $5,000 and a building recorded at
$80,000. All liabilities have been paid. The partners’ capital accounts are as
follows Harry $40,000, Landers $30,000 and Waters 15,000. The partners share
profits and losses 4:4:2.
If the building is sold for $50,000, how much cash will Waters receive in the final
settlement?
34. A local partnership has assets of cash of $130,000 and land recorded at
$700,000. All liabilities have been paid and the partners are all personally
insolvent. The partners’ capital accounts are as follows Roberts, $500,000, Ferry,
$300,000 and Mones, $30,000. The partners share profits and losses 5:3:2.
If the land is sold for $450,000, how much cash will Roberts receive in the final
settlement?
35. A local partnership has assets of cash of $130,000 and land recorded at
$700,000. All liabilities have been paid and the partners are all personally
insolvent. The partners’ capital accounts are as follows Roberts, $500,000, Ferry,
$300,000 and Mones, $30,000. The partners share profits and losses 5:3:2.
If the land is sold for $450,000, how much cash will Mones receive in the final
settlement?
36. What is the role of the accountant during the liquidation process?
37. The partnership of Rayne, Marin, and Fulton was being liquidated by the
partners. Rayne was insolvent and did not have enough assets to pay all his
personal creditors. Under what conditions might Rayne’s personal creditors have
claimed some of the partnership assets?
38. The Arnold, Bates, Carlton, and Delbert partnership was liquidating. It had
paid all its liabilities and had some assets yet to be sold. The partners had
capital account balances of ($50,000), $90,000, $110,000, and $130,000. There
was $40,000 cash available for distribution to the partners. What procedures
would be followed to determine the amount of cash that could safely be
distributed to each partner?
39. Xygote, Yen, and Zen were partners who were liquidating their
partnership. Each partner has a deficit balance in their respective capital
account. All assets from the partnership have been liquidated and all of the
liabilities had been paid. How should any additional cash coming into the
partnership be distributed to the partners?
40. What is the purpose of a
predistribution
plan
?
41. What financial schedule would be prepared for a partnership that has
begun liquidation but has not yet completed the process? What is the purpose of
this schedule?