1.

The following information was taken from Hussey Corp, which has recently come under the jurisdiction of a licensed trustee in bankruptcy:

Cash $ 20,000

Accounts Receivable ($325,000 collectible) 500,000

Inventories - materials (estimated fair value: $100,000) 200,000

Inventories - finished goods (estimated fair value: $400,000) 400,000

Land and Buildings - net (fair value of $1,300,000) 1,500,000

Trucks (estimated fair value $45,000) 60,000

Equipment (estimated fair value $200,000) 300,000

Goodwill 50,000

$3,030,000

Trade Accounts Payable $800,000

Bank Loan (secured by 80% of Accounts Receivable) 275,000

Wages Payable (current - all with priority) 140,000

Truck Loans (secured by trucks with $30,000 realizable value) 70,000

Income Tax and Source Deductions 75,000

Mortgage Note Payable (secured by land and buildings) 600,000

Loan payable (secured by finished goods) 450,000

Notes Payable (unsecured) 750,000

Common Stock 200,000

Deficit (330,000)

$3,030,000

Prepare a statement of affairs for Hussey.

2.

The following information relates to the capital and drawing accounts of the Algoma and College partnership for the calendar year 2011:

Algoma College

Capital Accounts

Balance, January 1, 2011 $186,000 $114,000

Additional investment, June 1, 2011 24,000 36,000

Withdrawal, July 1, 2011 - (10,000)

Capital balance, December 31, 2011

(before drawings) $210,000 $140,000

Drawing acct balance, December31, 2011 $10,000 $12,000

The partnership agreement provides that the partnership income is divided equally after salary allowances of $12,000 per year for each partner and after interest allowances of 10% annual rate on average capital balances.

Prepare the income allocation assuming:

a. Partnership net income of $91,000.

b. Partnership loss of $3,000.

3.

Denomme, Galotta and Matthews share profits and losses in the ratio of 2:3:5. They have decided to wind up their partnership. As at March 31, 2009 the balance sheet is as follows:

Assets

Cash $ 4,000

Other assets 20,000

$24,000

Liabilities

Trade $ 5,000

Matthews, loan 2,000

Capital accounts:

Denomme 4,500

Galotta 7,500

Matthews 5,000

$24,000

Required:

a. Prepare a cash distribution plan for the partnership on March 31, 2009.

b. During the liquidation of the partnership the following events occur:

In April 2009, non-cash assets with at book value of $8,500 are sold for $5,500 and $2,100 is paid to outside creditors.

In May 2009, the remaining non-cash assets are sold for $7,000 and the rest of the outside creditors are paid. Liquidation expenses of $380 are paid.

Calculate the amount that each partner received in both April and May.