Chap016_ClassProblems_solu

Chap016_ClassProblems_solu - Solutions to Chapter 16...

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Solutions to Chapter 16 In‐class Problems E16-4 Lump-Sum Liquidation a. BG Land Development Company Statement of Partnership Realization and Liquidation Lump-Sum Distribution Capital Balances Noncash Accounts Mitchell, Matthews Mitchell Michaels Cash Assets Payable Loan 50% 30% 20 Balances 20,000 150,000 (30,000) (10,000) (80,000) (36,000) (14,000) Sale of assets at a $40,000 loss 110,000 (150,000 ) 20,000 12,000 8,000 130,000 -0- (30,000) (10,000) (60,000) (24,000) (6,000) Payment to creditors (incl. Mitchell) (40,000 ) 30,000 10,000 90,000 -0- -0- -0- (60,000) (24,000) (6,000) Payment to partners (90,000 ) 60,000 24,000 6,000 Balances -0- -0- -0- -0- -0- -0- -0- (Parentheses indicate credit amount.) Note that the UPA 1997 requires that the loan payable to Mitchell has the same legal status as the other partnership’s liabilities. The loan the partnership received from Mitchell must be paid, or provided for, prior to any distributions to the partners.
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Chap016_ClassProblems_solu - Solutions to Chapter 16...

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