Practice 11- Ch 15 Partnership Liquidation

# Practice 11- Ch 15 Partnership Liquidation - 1 Ch 15...

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Unformatted text preview: 1 Ch 15: Partnership Liquidation Three Practice Problems: 15-5, 15-20, and 15-28 Solutions: Problem 1: 15 5. 5. B Insolvent Partner Bell Hardy Dennard Reported balances \$50,000 \$56,000 \$14,000 \$80,000 Suddath Loss on sale of assets (\$110,000) split on a 4:3:2:1 basis (44,000 ) (33,000 ) (22,000 ) (11,000 Adjusted balances \$ 6,000 \$23,000 \$(8,000) \$69,000 ) Potential loss from Dennard deficit (split 4:3:1) (4,000 ) (3,000 ) 8,000 (1,000 Minimum cash distributions \$2,000 \$20,000 \$ -0- \$68,000 ) Problem 2: 15 -20. Determine Payments under a Variety of Circumstances; Safe Capital Balances; Predistribution Plan (50 minutes) a. Dobbs receives the entire \$10,000. Maximum potential losses of \$250,000 on noncash assets would be allocated as follows: Partner Share of Loss New Capital Balance Adams 2/10 x \$250,000 = \$50,000 \$ 30,000 Baker 3/10 x \$250,000 = \$75,000 \$(45,000) Carvil 3/10 x \$250,000 = \$75,000 \$(15,000) Dobbs 2/10 x \$250,000 = \$50,000 \$ 40,000 Maximum total potential losses of \$60,000 to be absorbed from Baker and Carvil above would then be allocated as follows on a 2:2 basis: Adams 2/4 x \$60,000 = \$30,000 -0- Dobbs 2/4 x \$60,000 = \$30,000 \$ 10,000 Absorbing the final loss would leave Dobbs with a safe capital balance of \$10,000. b. Adams receives the entire \$10,000. Maximum potential losses of \$250,000 on noncash assets would be allocated as follows: Partner Share of Loss New Capital Balance Adams 2/10 x \$250,000 = \$50,000 \$ 30,000 Baker 2/10 x \$250,000 = \$50,000 \$(20,000) Carvil 3/10 x \$250,000 = \$75,000 \$(15,000) Dobbs 3/10 x \$250,000 = \$75,000 \$ 15,000 Maximum total potential losses of \$35,000 to be absorbed from Baker and Carvil above would be allocated as follows on a 2:3 basis:...
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## This note was uploaded on 02/22/2012 for the course ACCT 501 taught by Professor Ma during the Spring '11 term at South Carolina.

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Practice 11- Ch 15 Partnership Liquidation - 1 Ch 15...

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