Reference no: EM132630111

Questions -

Q1. Simple Liquidation

The CPA Partnership operated by Cook, Parks, and Argo is being liquidated. A balance sheet prepared at this stage in their liquidation process is presented below.

The partners share profits and losses 30% (Cook), 50% (Parks), and 20% (Argo). The partners are all personally insolvent.

Required:

1. The partners wish to distribute the $40,000 in cash. Record in journal entry form the distribution of the available cash.

2. Record in journal entry form the completion of the liquidation process, assuming that the other assets of $50,000 are sold for $15,000.

Q2. Simple Liquidation

John, Jake, and Joe are partners with capital accounts of $90,000, $78,000, and $64,000 respectively. They share profits and losses in the ratio of 30:40:30. When the partners decide to liquidate, the business has $70,000 in cash, noncash assets totaling $260,000, and $98,000 in liabilities. The noncash assets are sold for $270,000, and the creditors are paid.

Required:

1. Prepare a schedule of partnership liquidation.

2. Prepare journal entries to record each of the following transactions.

(1) The sale of the noncash assets.

(2) The payment to the creditors.

(3) The distribution of cash to the partners.

Q3. Cash Distribution Schedule

The ABC Partnership is in the process of liquidation. The account balances prior to liquidation are given below:

The partners share profits in the following ratio: Amos, 1/5; Boone, 2/5; Childs, 2/5.

Required:

Prepare a schedule showing the calculations of the distribution of cash under the Uniform Partnership Act, assuming that all three partners have personal liabilities in excess of their personal assets.

Q4. Rights of Various Parties

The trial balance for the MAD Partnership is as follows just before declaring bankruptcy.

Partners share profits in the ratio 45:30:25.

Required:

1. Prepare a schedule to show how available cash would be distributed to the partners after creditors are paid in full. State which partner would receive the first cash available and at what point and to what degree each of the remaining partners would participate in cash distributions.

2. Cash of $30,000 is available to partners after the creditors have been paid in full. Prepare the general journal entry to record the distribution of $30,000.