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Exam 17: Partnership Liquidation

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Question 1

Multiple Choice

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Use the following information to answer the question(s) below. Lola,Melvin,and Nettie are in the process of liquidating their partnership.Since it may take several months to convert the other assets into cash,the partners agree to distribute all available cash immediately,except for $12,000 that is set aside for contingent expenses.The balance sheet and residual profit and loss sharing percentages are as follows: -Using a safe payment schedule,how much cash should Lola receive in the first distribution?

A) $ 81,000
B) $ 98,000
C) $168,600
D) $202,500

E) A) and B)
F) All of the above

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Question 2

Multiple Choice

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What is the proper disposition of a partnership loan that was made from a partner who has a debit balance in the capital account?

A) The loan is ignored in liquidation.
B) The loan is offset against the debit balance in the capital account.
C) The loan is charged off to the capital accounts of all the partners in their profit and loss sharing ratios.
D) The loan is held for payment after all other capital accounts are covered.

E) A) and B)
F) B) and C)

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B

Question 3

Multiple Choice

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Use the following information to answer the question(s) below. On June 30,2011,the Able,Baker,and Charlie partnership had the following fiscal year-end balance sheet: The percentages shown are the residual profit and loss sharing ratios.The partners dissolved the partnership on July 1,2011,and began the liquidation process.During July the following events occurred: * Receivables of $6,000 were collected. * All inventory was sold for $8,000. * All available cash was distributed on July 31,except for $4,000 that was set aside for contingent expenses. -How much cash would Baker receive from the cash that is available for distribution on July 31? (Assume a safe payments schedule is used. )

If conditions produce a debit balance in a partner's capital account when liquidation losses are allocated,then

If all partners are included in the first installment of an installment liquidation,then in future installments

The Justin,Kyle,and Lulu partnership was dissolved by the partners on May 1,2011.Their balance sheet on that date is shown below: In May,other assets with a book value of $46,000 were sold for $50,000 in cash. Required: Determine how the available cash on May 31,2011 will be distributed.

The balance sheet of the Park,Quid,and Reggie partnership on November 1,2011 (before commencement of partnership liquidation)was as follows: Liquidation events in November were as follows: - All receivables were settled for $110,000; - Plant assets with a book value of $90,000 were sold for $52,000. Required: Determine how the available cash on November 31,2011 should be distributed.

Use the following information to answer the question(s) below. Lola,Melvin,and Nettie are in the process of liquidating their partnership.Since it may take several months to convert the other assets into cash,the partners agree to distribute all available cash immediately,except for $12,000 that is set aside for contingent expenses.The balance sheet and residual profit and loss sharing percentages are as follows: -Using a safe payments schedule,how much cash should Melvin receive in the first distribution?

Gains and losses incurred at liquidation are distributed to the partners using the residual profit and loss sharing ratios because

Tye,Ula,Val,and Watt are partners who share profits and losses 40%,30%,20%,and 10%,respectively.The partnership will be liquidated gradually over several months beginning January 1,2011.The partnership trial balance at December 31,2010 is as follows: Required: Prepare a cash distribution plan for January 1,2011,showing how cash installments will be distributed among the partners as it becomes available.Prepare vulnerability rankings for the partners and a schedule of assumed loss absorption.

Use the following information to answer the question(s) below. On June 30,2011,the Able,Baker,and Charlie partnership had the following fiscal year-end balance sheet: The percentages shown are the residual profit and loss sharing ratios.The partners dissolved the partnership on July 1,2011,and began the liquidation process.During July the following events occurred: * Receivables of $6,000 were collected. * All inventory was sold for $8,000. * All available cash was distributed on July 31,except for $4,000 that was set aside for contingent expenses. -How much cash would Able receive from the cash that is available for distribution on July 31? (Assume a safe payments schedule is used. )

The balance sheet of the Ama,Bade,and Calli partnership on May 1,2011 (before commencement of partnership liquidation)was as follows: Liquidation events in May were as follows: - The inventory was sold for $12,000 below book value; - Plant assets with a book value of $100,000 were sold for $120,000. Required: Determine how the available cash on May 31,2011 should be distributed.

In partnership liquidations,what are safe payments?

The partnership of May,Novem,and Octo was dissolved.By August 1,2011,all assets had been converted into cash and all partnership liabilities were paid.The partnership balance sheet on August 1,2011 (with partner residual profit and loss sharing percentages)was as follows: The value of partners' personal assets and liabilities on August 1,2011 were as follows: Required: Prepare the final statement of partnership liquidation.

Use the following information to answer the question(s) below. On June 30,2011,the Able,Baker,and Charlie partnership had the following fiscal year-end balance sheet: The percentages shown are the residual profit and loss sharing ratios.The partners dissolved the partnership on July 1,2011,and began the liquidation process.During July the following events occurred: * Receivables of $6,000 were collected. * All inventory was sold for $8,000. * All available cash was distributed on July 31,except for $4,000 that was set aside for contingent expenses. -The book value of the partnership equity (i.e. ,total equity of the partners) on June 30,2011 is

The partnership of Dolla,Earl,and Festus was dissolved on January 1,2011.The balance sheet at that date is shown below: In January,$34,000 of the accounts receivable was collected,and an additional $6,000 was determined to be uncollectible.The remaining receivables are still expected to be collected. Required: Determine how the available cash on January 31,2011 will be distributed.(Use a safe payments schedule. )

The year-end balance sheet and residual profit and loss sharing percentages for the Gary,Harold,and Ivan partnership on December 31,2011,are as follows: The partners agree to liquidate the business and distribute cash when it becomes available.A cash distribution plan is developed with vulnerability rankings for the Gary,Harold and Ivan partnership.After outside creditors are paid,the cash available will initially go to

The partners of the Minion,Nocti and Overly partnership share profits and losses in the ratio of 6:3:1,respectively.The partners have decided to liquidate and terminate the partnership.Prior to liquidation,the partnership balance sheet was as follows: Required: Prepare a schedule of liquidation,given that the partnership sold the inventory for $40,000 and the fixed assets for $120,000.

Which partner is considered the most vulnerable as a result of a computation of vulnerability rankings?

Which statement is correct in describing the rank order of payments as specified by the Uniform Partnership Act?