Advanced Accounting Exam 2

The Keaton, Lewis, and Meador partnership had the following balance sheet just before entering liquidation: Cash: $10,000 NonCash Assets: $300,000 Total: $310,000 Liabilities: $130,000 Keaton, Capital: $60,000 Lewis, Capital: $40,000 Meador, Capital: $80,000 Total: $310,000 Keaton, Lewis, and Meador share profits and leases in a ratio of 2:4:4. Noncash assets were sold for $180,000. Liquidation expenses were $10,000. Assume that Lewis was personally insolvent and could not contribute any assets to the partnership, while Keaton and Meador were both solvent. What amount of cash would Keaton have recieved from the distribution of partnership assets? a.) $38,000 b.) $30,000 c.) $24,000 d.) $34,000 e.) $31,600

B

Which of the following statements is false concerning the partnership Schedule of Liquidation? a.) Liquidations may take a considerable length of time to complete b.) Frequent reporting by the accountant is rarely necessary c.) The Schedule of Liquidation provides a listing of transactions to date, current cash, and capital balances d.) The Schedule of Liquidation provides a listing of property still held by the partnership as well as liabilities remaining unpaid e.) The Schedule of Liquidation keeps creditors and partners apprised of the results of the process of dissolution

B

Under the marshaling of assets doctrine, personal creditors can claim a partner's share of partnership assets under which condition? a.) Payment of all partnership debts is assured b.) The insolvent partner has a positive capital balance c.) Both A and B d.) Neither A or B e.) Personal creditors can not claim a partner's share of partnership assets

C

A local partnership has assets of cash of $5,000 and a building recorded at $80,000. All liabilities have been paid. The partners capital accounts are as follows: Harry $40,000, Landers $30,000 and Waters $15,000. The partners share profits and losses 4:2:2. If the building is sold for $50,000, how much cash will Henry receive in the final settlement? a.) $5,000 b.) $9,000 c.) $18,000 d.) $28,000 e.) $55,000

D

What accounting transactions are not recorded by an accountant during partnership liquidation? a.) the conversion of partnership assets into cash b.) the allocation of gains against losses from sales of assets c.) The payment of liabilities and expenses d.) The initiation of legal action by creditors of the partnership e.) Writeoff of remaining unpaid debts

D

What is the preferred method of resolving a partner's deficit balance, according to the Uniform Partnership Act? a.) Partners never have a deficit balance b.) The other partners must contribute personal assets to cover the deficit balance c.) The partnership must sell assets in order to cover the deficit balance d.) The partner with a deficit balance must contribute personal assets to cover the deficit balance e.) The partner with a deficit balance contributes personal assets only if those personal assets exceed personal liabilities

D

Which item is not shown on the schedule of partnership liquidation? a.) Current cash balances b.) Property owned by the partnership c.) Liabilities still to be paid d.) Personal assets of the partners e.) Current capital balances of the partners

D

The Henry, Isaac, and Jacobs partnership was about to enter liquidation with the following account balances: Cash: $90,000 Noncash Assets: $300,000 Total: $390,000 Liabilities: $60,000 Henry, Capital: $80,000 Isaac, Capital: $110,000 Jacobs, Capital: $140,000 Total: $390,000 Estimated expenses of liquidation were $5,000. Henry, Isaac, and Jacob shared profits and lossess in a ratio of 2:4:4. What amount of cash was available for safe payments, based on the above information? a.) $30,000 b.) $85,000 c.) $25,000 d.) $35,000 e.) $40,000

c

When a partnership is insolvent and partner has a deficit capital balance, that partner is legally required to: a.) declare personal bankruptcy b.) initiate legal proceedings against the partnership c.) contribute cash to the partnership d.) deliver a note payable to the partnership with specific payment terms e.) None of the above. The partner has no legal responsibility to cover the capital deficit balance

c

Adams, Battle, and Creighton share profits and losses in a ratio of 3:2:5. Liquidation expenses are expected to be $12,000. After the liquidation expenses of $12,000 had been paid and the noncash assets sold, Creighton had a deficit of $8,000. For what amount were the noncash assets sold? a.) $170,000 b.) $264,000 c.) $158,000 d.) $146,000 e.) $185,000

A

Which of the following statements is correct? a.) If a partner of a liquidating partnership is unable to pay a capital account deficit, the deficit is absorbed by the other partners in the profit and loss ratio of those partners b.) Gains and losses from the sale of noncash assets are divided into the ratio of the partners' capital account balances if there is no income-sharing plan in the partnership contract

A

Which of the following statements is true concerning the distribution of safe payments? a.) The distribution of safe payments assumes that any capital deficit balances will prove to be a total loss to the partnership b.) Safe payments are equal to the recorded capital balances of partners with positive capital balances c.) The distribution of safe payments may only be made after all liabilities have been paid d.) In computing safe payments, partners with positive capital balances are assumed to absorb an equal share of any deficit balance(s) e.) There are no safe payments until the liquidation is complete

A

Harding, Jones, and Sandy are in the process of liquidating and the partners have the following capital balances: $20,000, $22,000, and ($10,000), respectively. The partners share all profits and losses 50%, 35%, and 15%. Sandy has indicated that the ($10,000) deficit will be covered with a forthcoming contribution. The remaining partners have requested to recieved $26,382 in cash that is available - how should this cash be split? a.) Harding $7,500, Jones $18,882 b.) Harding $8,500, Jones $17,882 c.) Harding $8,000, Jones $18,382 d.) Harding $9,000, Jones $17,382 e.) Harding $7,000, Jones $19,382

B

Harding, Jones, and Sandy is in the process of liquidating and the partners have the following capital balances: $24,000, $24,000, and ($9,000) respectively. The partners share all profits and losses 16%, 48%, and 36%, respectively. Sandy has indicated that the ($9,000) deficit will be covered with a forthcoming contribution. The remaining partners have requested to immediately received $20,000 in cash that is available. How should this cash be distributed? a.) Harding $5,000; Jones $15,000 b.) Harding $17,000; Jones $3,000 c.) Harding $11,154; Jones $8,846 d.) Harding $14,297; Jones $4,703 e.) Harding $12,500; Jones $7,500

B

A local partnership has assets of cash of $5,000 and a building recorded at $80,000. All liabilities have been paid. The partners capital accounts are as follows: Harry $40,000, Landers $30,000 and Waters $15,000. The partners share profits and losses 4:2:2. If the building is sold for $50,000, how much cash will Waters receive in the final settlement? a.) $5,000 b.) $9,000 c.) $18,000 d.) $28,000 e.) $55,000

B

Gonda, Heron, and Morse is considering possible liquidation because parter Morse is personally insolvent. The partners have the following capital balances: $60,000, $70,000, and $40,000, respectively, and share profits and losses 30%, 45%, and 25% respectively. The partnership has $200,000 in noncash assets that can be sold for $150,000. The partnership has $10,000 cash on hand, and $40,000 in liabilities. What is the minimum that partner Morse's creditors would receive if they have filed a claim for $50,000? a.) $0 b.) $27,500 c.) $45,000 d.) $47,500 e.) $50,000

B

The Keaton, Lewis, and Meador partnership had the following balance sheet just before entering liquidation: Cash: $10,000 Noncash: $300,000 Total: $310,000 Liabilities: $130,000 Keaton, Capital: $60,000 Lewis, Capital: $40,000 Meador, Capital: $80,000 Total: $310,000 Keaton, Lewis, and Meador share profits and losses in a ratio of 2:4:4. Noncash assets were sold for $180,000. Liquidation expenses were $10,000. Assume that Keaton was personally insolvent with assets of $8,000 and liabilities of $60,000. Lewis and Meador were both solvent and able to cover deficits in their capital accounts, if any. What amount of cash could Keaton's personal creditors have expected to recieve from partnership assets? a.) $30,000 b.) $0 c.) $52,000 d.) $26,000 e.) $34,000

E

Which of the following will not result in the termination and liquidation of a partnership? 1) Partners are incompatible and choose to cease operations. 2) There are excessive losses that are expected to continue. 3) Retirement of a partner. A.1 only B.1 and 2 only C.2 and 3 only D.3 only E.)1, 2, and 3

E