Acct 2333 CH 15

What is a predistribution plan? A list of the procedures to be performed during a liquidation. A determination of the final cash distribution to the partners on the settlement date. A guide for the cash distributions to partners during a liquidation. A detailed list of the transactions that will transpire in the reorganization of a partnership.

A guide for the cash distributions to partners during a liquidation

When a partnership is liquidated, how is the final distribution of partnership cash made to the partners? According to the initial investment made by each of the partners According to the final capital account balances According to the profit and loss ratio Equally

According to the final capital account balances

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? $12,800 to X, $8,600 to Y, $8,600 to Z. $24,000 to X, $6,000 to Y, $0 to Z. $15,000 to X, $9,000 to Y, $6,000 to Z. $0 to X, $18,000 to Y, $12,000 to Z.

$0 to X, $18,000 to Y, $12,000 to Z.

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: Kevin, capital (40%)$59,000Michael, capital (30%) 39,000Brendan, capital (10%) 34,000Jonathan, capital (20%) 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? $14,750 $12,250 $19,500 $17,000

$17,000

A partnership is considering possible liquidation because one of the partners (Bell) is personally insolvent. Profits and losses are divided on a 4:3:2:1 basis, respectively. Capital balances at the current time are Bell, capital$50,000Hardy, capital 56,000Dennard, capital 14,000Suddath, capital 80,000 Bell's creditors have filed a $21,000 claim against the partnership's assets. The partnership currently holds assets of $300,000 and liabilities of $100,000. If the assets can be sold for $190,000, what is the minimum amount that Bell's creditors would receive? $0 $2,000 $2,800 $6,000

$2,000

A local partnership is liquidating and is currently reporting the following capital balances: Barley, capital (50% share of all profits and losses)$44,000 Carter, capital (30%) 32,000 Desai, capital (20%) (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? Barley, $32,000; Carter, $20,000. Barley, $29,000; Carter, $23,000. Barley, $22,000; Carter, $30,000. Barley, $32,500; Carter, $19,500.

Barley, $29,000; Carter, $23,000.

A partnership has gone through liquidation and now reports the following account balances: Cash$16,000 Loan from Jones 3,000 Wayman, capital (2,000)(deficit)Jones, capital (5,000)(deficit)Fuller, capital 13,000 Rogers, capital 7,000 Profits and losses are allocated on the following basis: Wayman, 30 percent; Jones, 20 percent; Fuller, 30 percent; and Rogers, 20 percent. Which of the following events should occur now? Fuller should receive $10,600 and Rogers $5,400. Fuller should receive $11,800 and Rogers $4,200. Jones should receive $3,000 cash because of the loan balance. Jones should receive $3,000, Fuller $8,800, and Rogers $4,200.

Fuller should receive $10,600 and Rogers $5,400.

Which of the following statements is true concerning the accounting for a partnership going through liquidation? Within a liquidation, all gains and losses are divided equally among the partners. Because gains and losses rarely occur during liquidation, no special accounting treatment is warranted. A separate income statement is created to measure only the profit or loss generated during liquidation. Gains and losses are reported directly as increases and decreases in the appropriate capital account.

Gains and losses are reported directly as increases and decreases in the appropriate capital account.

During a liquidation, if a partner's capital account balance drops below zero, what should happen? The partner with a deficit contributes enough assets to offset the deficit balance. The partner with the highest capital balance contributes sufficient assets to eliminate the deficit. The other partners file a legal suit against the partner with the deficit balance. The deficit balance is removed from the accounting records with only the remaining partners sharing in future gains and losses.

The partner with a deficit contributes enough assets to offset the deficit balance.

A partnership has the following balance sheet prior to liquidation (partners' profit and loss ratios are in parentheses): Cash$33,000Liabilities$50,000Other assets 100,000Playa, capital (40%) 24,000 Bahia, capital (30%) 29,000 Arco, capital (30%) 30,000Total$133,000Total$133,000 During liquidation, other assets are sold for $80,000, liabilities are paid in full, and $15,000 in liquidation expenses are paid. Based on the final statement of partnership liquidation, what amount of cash does each partner receive as a result of this liquidation? Playa, $10,000; Bahia, $18,500; Arco, $19,500 Playa, $16,000; Bahia, $23,000; Arco, $24,000 Playa, $6,000; Bahia, $4,500; Arco, $4,500 Playa, $19,200; Bahia, $14,400; Arco, $14,400

Playa, $10,000; Bahia, $18,500; Arco, $19,500

Carney, Pierce, Menton, and Hoehn are partners who share profits and losses on a 4:3:2:1 basis, respectively. They are beginning to liquidate the business. At the start of this process, capital balances are Carney, capital$60,000Pierce, capital 27,000Menton, capital 43,000Hoehn, capital 20,000 Which of the following statements is true? The first available $3,000 will go to Menton. Carney will collect a portion of any available cash before Hoehn receives money. The first available $2,000 will go to Hoehn. Carney will be the last partner to receive any available cash.

The first available $3,000 will go to Menton.