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42. What events or circumstances might force the termination of a partnership
and liquidation of its assets?
43. For a partnership, how should liquidation gains and losses be accounted
for?
44. What should occur when a solvent partner has a deficit balance?
45. Why is a
Schedule of Liquidation
prepared?
46. What is a
safe cash payment
?
47. The Albert, Boynton, and Creamer partnership was in the process of
liquidating its assets and going out of business. Albert, Boynton, and Creamer
had capital account balances of $80,000, $120,000, and $200,000, respectively,
and shared profits and losses in the ratio of 1:3:2. Equipment that had cost
$90,000 and had a book value of $60,000 was sold for $24,000 cash.
Required:
Prepare the appropriate journal entry to record the sale of the equipment,
distributing any gain or loss directly to the partners.
48. The Amos, Billings, and Cleaver partnership had two assets: (1) cash of
$40,000 and (2) an investment with a book value of $110,000. The ratio for
sharing profits and losses is 2:1:1. The balances in the capital accounts were:
Required:
If the investment was sold for $80,000, how much cash would each partner have
received?
49. As of January 1, 2011, the partnership of Canton, Yulls, and Garr had the
following account balances and percentages for the sharing of profits and losses:
The partnership incurred losses in recent years and decided to liquidate. The
liquidation expenses were expected to be $10,000.
How much of the existing cash balance could be distributed safely to partners at
this time?
50. As of January 1, 2011, the partnership of Canton, Yulls, and Garr had the
following account balances and percentages for the sharing of profits and losses:
The partnership incurred losses in recent years and decided to liquidate. The
liquidation expenses were expected to be $10,000.
How much cash should each partner receive at this time, pursuant to a proposed
schedule of liquidation?
51. As of January 1, 2011, the partnership of Canton, Yulls, and Garr had the
following account balances and percentages for the sharing of profits and losses:
The partnership incurred losses in recent years and decided to liquidate. The
liquidation expenses were expected to be $10,000.
What would be the maximum amount Garr might have to contribute to the
partnership to eliminate a deficit balance in his account?
52. As of January 1, 2011, the partnership of Canton, Yulls, and Garr had the
following account balances and percentages for the sharing of profits and losses:
The partnership incurred losses in recent years and decided to liquidate. The
liquidation expenses were expected to be $10,000.
If the noncash assets are sold for $105,000, what would be the maximum amount
of cash that Canton could expect to receive?
53. A partnership had the following account balances: Cash, $91,000; Other
Assets, $702,000; Liabilities, $338,000; Polk, Capital (50% of profits and losses),
$221,000; Garfield, Capital (30%), $143,000; Arthur, Capital (20%), $91,000. The
company liquidated and $10,400 became available to the partners.
Required:
Who would have received the $10,400?
54. A partnership held three assets: Cash, $13,000; Land, $45,000; and a
Building, $65,000. There were no recorded liabilities. The partners anticipated
that expenses required to liquidate their partnership would amount to $6,000.
Capital balances were as follows:
The partners shared profits and losses 30:30:20:20, respectively.
Required:
Prepare a proposed schedule of liquidation, showing how cash could be safely
distributed to the partners at this time.
55. On January 1, 2011, the partners of Won, Cadel, and Dax (who shared
profits and losses in the ratio of 5:3:2, respectively) decided to liquidate their
partnership. The trial balance at this date was as follows:
The partners planned a program of piecemeal conversion of the business assets
to minimize liquidation losses. All available cash, less an amount retained to
provide for future expenses, was to be distributed to the partners at the end of
each month. A summary of liquidation transactions follows:
56. On January 1, 2011, the partners of Won, Cadel, and Dax (who shared
profits and losses in the ratio of 5:3:2, respectively) decided to liquidate their
partnership. The trial balance at this date was as follows:
57. On January 1, 2011, the partners of Won, Cadel, and Dax (who shared
profits and losses in the ratio of 5:3:2, respectively) decided to liquidate their
partnership. The trial balance at this date was as follows:
The partners planned a program of piecemeal conversion of the business assets
to minimize liquidation losses. All available cash, less an amount retained to
provide for future expenses, was to be distributed to the partners at the end of
each month. A summary of liquidation transactions follows:
