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Sample Quiz for Chapter 16

Sample Quiz for Chapter 16 - Indiana University of...

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Indiana University of Pennsylvania Department of Accounting ACCT 401/501: Advanced Accounting Dr. Rahman Sample Quiz for Chapter on Partnership Liquidation Part I. Circle the best choice. Use the following information for questions 1, 2 and 3. On June 30, 2009, the Ritz, Sally, and Tracy partnership had the following fiscal year-end balance sheet: Cash $ 20,000 Accounts payable $ 35,000 Accounts receivable 30,000 Loan from Sally 25,000 Inventory 70,000 Ritz, capital (20%) 70,000 Plant assets-net 60,000 Sally, capital(30%) 50,000 Loan to Ritz 30,000 Tracy, capital(50%) 30,000 Total assets $210,000 Total liab./equity $210,000 The percentages shown are the residual profit and loss sharing ratios. The partners dissolved the partnership on July 1, 2009,. and began the liquidation process. During July the following events occurred: * Receivables of $15,000 were collected. * The inventory was sold for $20,000. * All available cash was distributed on July 31, except for $10,000 that was set aside for contingent expenses. 1 . The book value of the partnership equity (i.e., total equity of the partners) on June 30, 2009 is: a. $120,000. b. $145,000. c. $150,000. d. $210,000. 2. The cash available for distribution to the partners on July 31, 2009 is: 3. How much cash would Sally receive from the cash that is available for distribution on July 31?
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4. The ABC partnership ceased operations and is in the process of liquidation. The balance sheet and residual profit and loss sharing percentages are as follows: Cash $ 50,000 Ann, capital (50%) $100,000 Non-cash assets 150,000 Ben, capital (25%) 50,000 _______ Cid, capital (25%) 50,000 Total Assets $200,000 Total equity $200,000 Under an installment liquidation of the ABC partnership: a. a safe payments schedule must be prepared before each cash distribution to avoid excessive payments to partners.
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