Ch15 HW - 14. (20 Minutes) (Final settlement of a...

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14. (20 Minutes) (Final settlement of a partnership being liquidated) Part a. Brown gets $21,000, Fish gets $12,000, and Stone gets $2,000. Brown Fish Stone Reported balances . ..................................... $25,000 $15,000 $5,000 Loss on sale of land ($10,000) split on a 4:3:3 basis. ...................................... (4,000 ) (3,000 ) (3,000 ) Cash distribution . ........................................ $21,000 $12,000 $2,000 Part b. Brown gets $16,429 and Fish gets $8,571 Brown Fish Stone Reported balances . ..................................... $25,000 $15,000 $5,000 Loss on sale of land ($20,000) split on a 4:3:3 basis. ........................................... (8,000 ) (6,000 ) (6,000 ) Adjusted balances . ...................................... $17,000 $ 9,000 $(1,000) Potential loss from Stone's deficit (split 4:3) (571 ) (429 ) 1,000 Cash distribution . ........................................ $16,429 $ 8,571 $ -0- Part c. Brown gets $10,714 and Fish gets $4,286 Brown Fish Stone Reported balances . ..................................... $25,000 $15,000 $5,000 Loss on sale of land ($30,000) split on a 4:3:3 basis. ........................................... (12,000 ) (9,000 ) (9,000 ) Adjusted balances . ...................................... $13,000 $ 6,000 $(4,000) Potential loss from Stone's deficit (split 4:3) (2,286 ) (1,714 ) 4,000 Cash distribution . ........................................ $10,714 $ 4,286 $ -0- 17.(15 Minutes) (Prepare a proposed schedule of liquidation) HARDWICK, SAUNDERS, AND FERRIS Proposed Schedule of Liquidation Hardwick, Ferris, Other Accounts Loan and Saunders, Cash Assets Payable Capital Capital Capital Beginning balances 90,000 820,000 210,000 270,000 200,000 230,000 Sold assets 200,000 (328,000) (51,200) (38,400) (38,400) Assumed: loss on remaining assets (492,000) (196,800) (147,600) (147,600)
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Paid liabilities (210,000 ) (210,000 ) Safe balances 80,000 0 0 22,000 14,000 44,000 Of the available $80,000, $22,000 will go to Hardwick, $14,000 to Saunders, and $44,000 to Ferris. 20.(10 Minutes) (Determine amount to be contributed by partner with a deficit balance) White and Blue are both insolvent and have negative capital balances (after offsetting the loan from White) totaling $15,000. Absorption by the other partners of these losses would be as follows (on a 30:10:20 basis): Partner Share of Loss New Capital Balance Black 30/60 x $15,000 = $7,500 $ (4,500) Green 10/60 x $15,000 = $2,500 $ (5,500) Brown 20/60 x $15,000 = $5,000 $10,000 Black, who is also insolvent, now has a deficit capital of $4,500 that would have to be absorbed by Brown and Green (on a 10:20 basis): Partner Share of Loss
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This note was uploaded on 03/06/2011 for the course ECON 435 taught by Professor Galven during the Spring '11 term at Ill. Chicago.

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Ch15 HW - 14. (20 Minutes) (Final settlement of a...

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