Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Following is a series of independent cases . In each situation, indicate the cash distribution to be made to partners at the end of the

Following is a series of independent cases. In each situation, indicate the cash distribution to be made to partners at the end of the liquidation process. Unless otherwise stated, assume that all solvent partners will reimburse the partnership for their deficit capital balances.

Part A-The Buarque, Monte, and Vinicius partnership reports the following accounts. Vinicius is personally insolvent and can contribute only an additional $27,000 to the partnership.

Cash

$

148,000

Liabilities

53,000

Monte, loan

56,000

Buarque, capital (50% of profits and losses)

36,000

Monte, capital (25%)

36,000

Vinicius, capital (25%)

(33,000

) (deficit)

Part B- Drawdy, Langston, and Pearl operate a local accounting firm as a partnership. After working together for several years, they have decided to liquidate the partnerships property. The partners have prepared the following balance sheet:

Cash

$

38,000

Liabilities

$

44,000

Drawdy, loan

23,000

Langston, loan

31,000

Noncash assets

186,000

Drawdy, capital (40%)

83,000

Langston, capital (30%)

68,000

Pearl, capital (30%)

21,000

Total assets

$

247,000

Total liabilities and capital

$

247,000

The firm sells the noncash assets for $138,000; it will use $33,000 of this amount to pay liquidation expenses. All three of these partners are personally insolvent.

Part C-Drawdy, Langston, and Pearl operate a local accounting firm as a partnership. After working together for several years, they have decided to liquidate the partnerships property. The partners have prepared the following balance sheet:

Cash

$

38,000

Liabilities

$

44,000

Drawdy, loan

23,000

Langston, loan

31,000

Noncash assets

186,000

Drawdy, capital

83,000

Langston, capital

68,000

Pearl, capital

21,000

Total assets

$

247,000

Total liabilities and capital

$

247,000

The firm sells the noncash assets for $138,000; it will use $24,000 of this amount to pay liquidation expenses. All three of these partners are personally insolvent. Assume that the profits and losses are split 2:4:4 to Drawdy, Langston, and Pearl, respectively.

Part D-Following the liquidation of all noncash assets, the partnership of Krups, Lindau, Riedel, and Schnee has the following account balances. Krups is personally insolvent.

Liabilities

$

9,000

Krups, loan

24,000

Krups, capital (30% of profits and losses)

(56,000

) deficit

Lindau, capital (30%)

(48,000

) deficit

Riedel capital (20%)

33,000

Schnee, capital (20%)

38,000

image text in transcribed

image text in transcribed

image text in transcribed

image text in transcribed

Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Indicate the cash distribution to be made to partners at the end of the liquidation pr that all solvent partners will reimburse the partnership for their deficit capital balanc Buarque, Monte, Loan and Capital Vinicius, Capital Capital $ 36,000 $ 0 Beginning balances Contribution by Vinicius Capital balances Elimination of Vinicius's deficit Final distribution 36,000 0 36,000 $ (33,000) 27,000 $ 6,000) $ 36,000 $ $ 36,000 $ 36,000 $ (6,000) Required A Required B Required C Required D Indicate the cash distribution to be made to partners at the end of the liquidatic that all solvent partners will reimburse the partnership for their deficit capital ba calculations. Round the final answer to nearest dollar amounts.) Drawdy, Langston, Loan and Loan and Capital Capital Pearl, Capital cap Beginning balances Loss on disposal Liquidation expenses Capital balances Allocation of Pearl's deficit Final distribution $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Required A Required B Required C Required D Indicate the cash distribution to be made to partners at the end of the liquidatic that all solvent partners will reimburse the partnership for their deficit capital ba calculations. Round the final answer to nearest dollar amounts.) Drawdy, Loan and Capital Langston, Loan and Capital Pearl, Capital Beginning balances Loss on disposal Liquidation expenses Capital balances Allocation of Pearl's deficit balance Final distribution $ 0 $ 0 0 $ 0 $ 0 $ 0 Required A Required B Required C Required D Indicate the cash distribution to be made to partners at the end of the liquidation process. Unless otherw that all solvent partners will reimburse the partnership for their deficit capital balances. (Do not round in calculations. Round the final answer to nearest dollar amounts.) Krups, Loan and Lindau, Capital Riedel, Capital Schnee, Capital Beginning balances Allocation of Krups's deficit balance Capital balances Contribution by Lindau Final distribution $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Income Tax Planning

Authors: Thomas P. Langdon, E. Vance Grange, Michael A. Dalton

5th Edition

1936602075, 978-1936602070

More Books

Students also viewed these Accounting questions

Question

Explain what is meant by buy-side and sell-side e-commerce.

Answered: 1 week ago

Question

What would you suggest as the first step in the change process?

Answered: 1 week ago