The after-closing trial balances of the Bea, Pat, and Tim partnership at December 31, 2011, included the
Question:
The after-closing trial balances of the Bea, Pat, and Tim partnership at December 31, 2011, included the following accounts and balances:
Cash ......................................................... $120,000
Accounts receivable-net ................................. 140,000
Inventory ..................................................... 200,000
Plant assets-net ............................................ 200,000
Trademarks ................................................... 20,000
Total debits ................................................ $680,000
Accounts payable ......................................... $150,000
Notes payable .............................................. 100,000
Bea capital (profit-sharing ratio, 50%) .................. 170,000
Pat capital (profit-sharing ratio, 30%) ................... 180,000
Tim capital (profit-sharing ratio, 20%) ................... 80,000
Total credits ................................................ $680,000
The partnership is to be liquidated as soon as possible, and all available cash except for a $10,000 contingency balance is to be distributed at the end of each month prior to the time that all assets are converted into cash.
During January 2012, $100,000 was collected from accounts receivable, inventory items with a book value of $80,000 were sold for $100,000, and available cash was distributed.
During February 2012, Bea received plant assets with a book value of $60,000 and a fair value of $50,000 in partial settlement of her equity in the partnership. Also during February, the remaining inventory items were sold for $60,000, liquidation expenses of $2,000 were paid, and a liability of $8,000 was discovered. Cash was distributed on February 28.
During March 2012, the plant assets were sold for $110,000, the remaining noncash assets were written off, final liquidation expenses of $5,000 were paid, and cash was distributed. The dissolution of the partnership was completed on March 31, 2012.
REQUIRED
Prepare a statement of partnership liquidation for the Bea, Pat, and Tim partnership for the period January 1 to March 31, 2012.
LiquidationLiquidation in finance and economics is the process of bringing a business to an end and distributing its assets to claimants. It is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations when they are due.... Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...
Step by Step Answer:
Bea Pat and Tim Partnership Statement of Partnership Liquidation for the period January 1 2012 to March 31 2012 50 30 20 Noncash Bea Pat Tim Cash Asse...View the full answer
Advanced Accounting
ISBN: 978-0133451863
12th edition
Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith
