ACCT 402 CONNECT CHP 15 - ACCT 402 CONNECT CHP 15 15-1 A...

Download Document
Showing pages : 1 - 3 of 27
This preview has blurred sections. Sign up to view the full version! View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: ACCT 402 CONNECT CHP 15 15-1 A partnership has gone through liquidation and now reports the following account balances: Cash $ 16,000 Loan from Jones 3,000 Wayma n, capital (2,000) (deficit) Jones, capital (5,000) (deficit) Fuller, capital 13,000 Rogers, capital 7,000 Profits and losses are allocated on the following basis: Wayman, 30 percent; Jones, 20 percent; Fuller, 30 percent; and Rogers, 20 percent. Which of the following events should occur now? (Do not round intermediate calculations.) Jones should receive $3,000 cash because of the loan balance. Jones should receive $3,000, Fuller $8,800, and Rogers $4,200. Fuller should receive $10,600 and Rogers $5,400. Fuller should receive $11,800 and Rogers $4,200. The $16,000 available cash can be distributed but should be done under the assumption that all deficit balances will be total losses. After offsetting Jones' loan against his deficit capital balance, both Jones and Wayman have deficits of $2,000; total $4,000. Fuller and Rogers, the two partners with positive capital balances, share profits in a 30:20 relationship (the equivalent of a 60%:40% ratio). Fuller would absorb $2,400 of the potential $4,000 loss with Rogers being allocated $1,600. The remaining capital balances ($10,600 and $5,400) are safe capital balances and those amounts can be immediately distributed. 15-2 A partnership has the following account balances: Cash, $92,000; Other Assets, $650,000; Liabilities, $317,000; Nixon (50% of profits and losses), $200,000; Cleveland (30%), $140,000; Pierce (20%), $85,000. The company liquidates, and $19,000 becomes available to the partners. Who gets the $19,000? (Leave no cells blank - be certain to enter "0" wherever required.) Nixon Cleveland Pierce Current cash distribution $ $ $ Explanation: Cleveland receives $16,400 and Pierce receives $2,600 Since the partnership currently has total capital of $425,000, the $19,000 that is available would indicate maximum potential losses of $406,000. Nixon Cleve land Pierce Rep orted balan ces $ 200,0 00 $ 140,0 00 $ 85,00 Anti cipate d loss ($406 ,000) split on a 5:3:2 basis (203, 000) (121, 800) (81,2 00) Pote ntial balan ces $ (3,00 ) $ 18,20 $ 3,800 Pote ntial loss from Nixon 's defici t (split 3:2) 3,000 (1,80 ) (1,20 ) Curr ent cash distri butio n $ 0 $ 16,40 $ 2,600 15-3 A partnership currently holds three assets: cash, $10,000; land, $35,000; and a building, $50,000. The partners anticipate that expenses required to liquidate their partnership will amount to $5,000. Capital balances are as follows: Ace, capital $25,000 Ball, capital 28,000 Eaton, capital 20,000 Lake, capital 22,000 The partners share profits and losses as follows: Ace (30%), Ball (30%), Eaton (20%), and Lake (20%). If a preliminary distribution of cash is to be made, how much will each partner receive? ...
View Full Document

Create a FREE account now to get started. Log In

The email address you entered is not valid. The email address you provided is already in use.
Your username must be at least 5 characters. Your username must consist of only alphanumeric characters. Your username must contain at least one letter. Your username contains inappropriate language. Another user has already claimed this username.
Your password must be at least 6 characters in length.
{[ $select.selected.label ]} Please select a valid school.
By creating an account you agree to our Privacy Policy, Terms of Use, and Honor Code.
Create my FREE account Processing...
Sign Up with Facebook

We will never post anything without your permission.

Already on Course Hero? Log In