Statement of LLC Liquidation

Lester, Torres, and Hearst are members of Arcadia Sales, LLC, sharing income and losses in the ratio of 2:2:1, respectively. The members decide to liquidate the limited liability company. The members' equity prior to liquidation and asset realization on August 1 are as follows:

Lester	$17,800
Torres	41,200
Hearst	25,600
Total	$84,600

In winding up operations during the month of August, noncash assets with a book value of $111,400 are sold for $138,100, and liabilities of $37,300 are satisfied. Prior to realization, Arcadia Sales has a cash balance of $10,500.

a. Prepare a statement of LLC liquidation. Enter any subtractions (balance deficiencies, payments, cash distributions, divisions of loss, sale of assets) as negative numbers using a minus sign. If an amount is zero, enter "0".

Arcadia Sales, LLC
Statement of LLC Liquidation
For the Period August 1-31
	Cash +	Noncash Assets =	Liabilities +	Member Equity Lester (2/5) +	Member Equity Torres (2/5) +	Member Equity Hearst (1/5)
Balances before realization	$	$	$	$	$	$
Sale of assets and division of gain	+			+	+	+
Balances after realization	$	$	$	$	$	$
Payment of liabilities
Balances after payment of liabilities	$	$	$	$	$	$
Distribution of cash to members
Final balances	$	$	$	$	$	$

b. Provide the journal entry for the final cash distribution to members. For a compound transaction, if an amount box does not require an entry, leave it blank.

c. What is the role of the income- and loss-sharing ratio in liquidating a LLC?

The income- and loss-sharing ratio is only used to on the realization of asset sales. It used for the final distribution.

Withdrawal of Partner

Lane Stevens is to retire from the partnership of Stevens and Associates as of March 31, the end of the current fiscal year. After closing the accounts, the capital balances of the partners are as follows: Lane Stevens, $331,000; Cherrie Ford, $169,000; and LaMarcus Rollins, $189,000. They have shared net income and net losses in the ratio of 3:2:2. The partners agree that the merchandise inventory should be increased by $30,500, and the allowance for doubtful accounts should be increased by $7,400. Stevens agrees to accept a note for $270,000 in partial settlement of his ownership equity. The remainder of his claim is to be paid in cash. Ford and Rollins are to share equally in the net income or net loss of the new partnership.

a. Journalize the entry to record the adjustment of the assets to bring them into agreement with current market prices. For a compound transaction, if an amount box does not require an entry, leave it blank.

b. Journalize the entry to record the withdrawal of Stevens from the partnership. For a compound transaction, if an amount box does not require an entry, leave it blank.

Liquidating PartnershipsDeficiency

Prior to liquidating their partnership, Underwood and Haines had capital accounts of $26,000 and $104,000, respectively. The partnership assets were sold for $50,000. The partnership had no liabilities. Underwood and Haines share income and losses equally.

Required:

a. Determine the amount of Underwood's deficiency. $

b. Determine the amount distributed to Haines, assuming Underwood is unable to satisfy the deficiency. $