Answer all circled questions. Also Show works for multiple choices that requires computation
3. Why are liquidation gains and losses usually recorded as direct adjustments to the partners' capital accounts? After liquidating all property and paying partnership obligations, what is the basis for allocating remaining cash among the partners? 5. What is the purpose of a statement of liquidation? What information doess it convey to its readers? 6. According to the Uniform Partnership Act, what events should occur if a partner incurs a negative capital balance during the liquidation process? How are safe capital balances computed when preliminary distributions of cash are to be made in a partnership liquidation? 8. How do loans from partners affect the distribution of assets in a partnership liquidation? 9What is the purpose of a proposed schedule of liquidation, and how is it developed? predistribution plan created for a partnership liquidation? 10. How is a If a partnership is liquidated, how is the final allocation of business assets made to the partners? Equally a. b. According to the profit and loss ratio. c. According to the final capital account balances d. According to the initial investment made by each of the partners Which of the following statements is true concerning the accounting for a partnership going through liquidation? a. Gains and losses are reported directly as increases and decreases in the appropriate capital account or loss generated during b. A separate income statement is created to measure only the profit liquidation. c. Because gains and losses rarely occur during liquidation, warranted d. Within a liquidation, all gains and losses are divided equally among the partners special accounting treatment is no During a liquidation, if a partner's capital account balance drops below zero, what should happen? a. The other partners file a legal suit against the partner with the deficit balance. b. The partner with the highest capital balance contributes sufficient assets to eliminate the deficit. c. The deficit balance is removed from the accounting records with only the remaining partners sharing in future gains and losses d. The partner with a deficit contributes enough assets to offset the deficit balance 4. A local partnership is liquidating and is currently reporting the following capital balances: Barley, capital (50% share of all profits and losses)... Carter, capital (30%). . Desai, capital (20 %) $ 44,000 32,000 (24,000) Desai has indicated that a forthcoming contribution will cover the $24,000 deficit. However, the two remaining partners have asked to receive the $52,000 in cash that is currently available. How much of this money should each of the partners receive? a. Barley, $22,000; Carter, $30,000. b. Barley, $32,000; Carter, $20,000. c. Barley, $29,000; Carter, $23,000. d. Barley, $32,500; Carter, $19,500. A partnership has the following balance sheet prior to liquidation (partners' profit and loss ratios are in parentheses): $ 33,000 $ 50,000 Cash Liabilities.. Playa, capital (40%) . Bahia, capital (30%). Arco, capital (30%) Other assets 100,000 24,000 29,000 30,000 $133,000 Total $133,000 Total During liquidation, other assets are sold for $80,000, liabilities are paid in full, and $15,000 in liquidation expenses are paid. What amount of cash does each partner receive as a result of this liquidation? Playa, $6,000; Bahia, $4,500; Arco, $4,500. a. b. Playa, $10,000; Bahia, $18,500; Arco, $19,500. c. Playa, $16,000; Bahia, $23,000; Arco, $24,000 d. Playa, $19,200; Bahia, $14,400; Arco, $14,400. 8. A partnership has the following capital balances: X (50 percent of profits and losses) = $150,000; Y (30 percent of profits and losses) = $120,000; Z (20 percent of profits and losses) = $80,000. If the partnership is to be liquidated and $30,000 becomes immediately available, who gets that money? a. $0 to X, $18,000 to Y, $12,000 to Z b. $15,000 to X, $9,000 to Y, $6,000 to Z. c. $12,800 to X, $8,600 to Y, $8,600 to Z d. $24,000 to X, $6,000 to Y, $0 to Z 9. A partnership is currently holding $400,000 in assets and $234,000 in liabilities. The partnership is to be liquidated, and $20,000 is the best estimation of the expenses that will be incurred during this process. The four partners share profits and losses as shown. Capital balances at the start of the liquidation follow $59,000 Kevin, capital (40%). . Michael, capital (30%). Brendan, capital (10%) Jonathan, capital (20%) 39,000 34,000 34,000 The partners realize that Brendan will be the first partner to start receiving cash. How much cash will Brendan receive before any of the other partners collect any cash? a. $12,250 b. $14,750 c. $17,000 d.$19,500
