Problem 15-6 (Algo) (LO 15-4) A partnership is considering possible liquidation because one of the partners (Bell) is personally insolvent. Profits and losses are divided on a 4:3:2:1 basis, respectively. Capital balances at the current time are Bell, capital Hardy, capital Dennard, capital Suddath, capital Bell's creditors have filed a $40,000 claim against the partnership's assets. The partnership currently holds assets of $490,000 and liabilities of $193,500. An independent appraiser indicates that the assets can be sold for $285,000. Required: Prepare a statement of partnership liquidation to determine the amount of cash that Bell would receive from the sale of partnership assets. Note: Amounts to be deducted should be entered with a minus sign. Balances Sale of assets Subtotal Pay liabilities Subtotal Allocate deficit Subtotal Distribute cash Ending balances $ $ $ 98,500 84,000 15,000 99,000 EA Cash BELL, HARDY, DENNARD, AND SUDDATH PARTNERSHIP Statement of Partnership Liquidation (Hypothetical) Assets 0 0 $ 0 $ FA 0 6A 0 Liabilities 0 $ 0 0 $ FA CHA 0 0 $ 0 Bell, Capital Hardy, Capital 40% 30% 0 $ 6A EA 0 0 $ 0 $ 6A 0 0 0 0 Dennard, Capital 20% $ FA $ CHA 0 0 Suddath, Capital 10% 0 $ 0 $ EA EA 0
Problem 15-6 (Algo) (LO 15-4) A partnership is considering possible liquidation because one of the partners (Bell) is personally insolvent. Profits and losses are divided on a 4:3:2:1 basis, respectively. Capital balances at the current time are Bell, capital Hardy, capital Dennard, capital Suddath, capital Bell's creditors have filed a $40,000 claim against the partnership's assets. The partnership currently holds assets of $490,000 and liabilities of $193,500. An independent appraiser indicates that the assets can be sold for $285,000. Required: Prepare a statement of partnership liquidation to determine the amount of cash that Bell would receive from the sale of partnership assets. Note: Amounts to be deducted should be entered with a minus sign. Balances Sale of assets Subtotal Pay liabilities Subtotal Allocate deficit Subtotal Distribute cash Ending balances $ $ $ 98,500 84,000 15,000 99,000 EA Cash BELL, HARDY, DENNARD, AND SUDDATH PARTNERSHIP Statement of Partnership Liquidation (Hypothetical) Assets 0 0 $ 0 $ FA 0 6A 0 Liabilities 0 $ 0 0 $ FA CHA 0 0 $ 0 Bell, Capital Hardy, Capital 40% 30% 0 $ 6A EA 0 0 $ 0 $ 6A 0 0 0 0 Dennard, Capital 20% $ FA $ CHA 0 0 Suddath, Capital 10% 0 $ 0 $ EA EA 0
Chapter21: Partnerships
Section: Chapter Questions
Problem 65P
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