Question: A local partnership is to be liquidated.

> State University Business School (SUBS) offers several degrees, including Bachelor of BusinessAdministration (BBA). The new dean believes in using cost accounting information tomake decisions and is reviewing a staff-developed income statement broken dow

> Betty’s Fashions operates retail stores in both downtown and suburban locations. The companyhas two responsibility centers: the City Division, which contains stores in downtown locations, and the Mall Division, which contains stores in suburban locations

> As an analyst at Delta Airlines, you are asked to help the operations staff. Operations has identified a new method of loading baggage that is expected to result in a 30 percent reductionin labor time but no changes in any other costs. The current labor

> Coastal Cabinets produces cabinets for new home builders. You have been called in to settle adispute between Coastal Cabinets and Executive Homes, a builder of custom homes. Executive Homes buys 20,000 units of a particular cabinet from Coastal Cabinets

> Place the letter of the appropriate accounting cost in Column 2 in the blank next toeach decision category in Column 1. Column 1 ___ Providingcost information for financial reporting ___ Identifying the best store in a chain ___ Determining which plant t

> Apple, Inc. incurs many types of costs in its operations. Required For each cost in the following table, identify the stage in the value chain where this cost is incurred: Cost ___ Programmer costs for a new operating system ___ Costs to ship computers

> Will studying cost accounting increase the chances that Carmen’s Cookies will succeed? How? Will it guarantee success? Explain.

> Why does a cost accountant need to be familiar with new developments in informationtechnology?

> Refer to the Business Application discussion of options backdating. If stock optionsand other forms of performance-based compensation result in some managers engagingin unethical or illegal behavior, why do firms still use them?

> Refer to the Business Application discussion of supply chain costs. A colleague says, “We don’t have to worry about other firms in the supply chain. If every firm in the chain minimizes its own cost, we can minimize the total cost and give the customer t

> What potential conflicts might arise between marketing managers and the controller’sstaff? How might these potential conflicts be resolved with a minimum of interference from the chief executive officer?

> Nabisco (a unit of Kraft Foods) makes a variety of cookies (OreosTM, for example)just like Carmen’s Cookies. In what ways are the cost accounting issues the same? Inwhat ways are they different?

> Airlines are well known for using complex pricing structures. For example, it is often (butnot always) less expensive to buy a ticket in advance than it is on the day of the flight.However, if the airline offered this lower (“discount”) fare for all seat

> Would you support a proposal to develop a set of “generally accepted” accountingstandards for measuring executive performance that would be used to determine compensation?Why or why not?

> “It’s not the job of accounting to determine strategy. It is only used to measure results.”Discuss.

> Explain the differences between financial accounting and cost accounting. Why arethese differences important?

> A client of the CPA firm of Harston and Mendez is a medical practice of seven local doctors. One doctor has been sued for several million dollars as the result of a recent operation. Because of what appears to be this doctor’s very poor judgment, a patie

> The partnership of Wilson, Cho, and Arrington has the following account information: This partnership will be liquidated, and the partners are scheduled to receive cash equal to any endingpositive capital balance. If a negative capital balance results,

> Read the following as well as any other published articles on the bankruptcy of the partnership of Laventhol&Horwath: “Laventhol Says It Plans to File for Chapter 11,” The Wall Street Journal, November 20, 1990, p. A3. “Laventhol Partners Face Long Proce

> If a partnership is liquidated, how is the final allocation of business assets made to the partners? a. Equally. b. According to the profit and loss ratio. c. According to the final capital account balances. d. According to the initial investment made by

> What is a predistribution plan? a. A list of the procedures to be performed during a liquidation. b. A guide for the cash distributions to partners during a liquidation. c. A determination of the final cash distribution to the partners on the settlement

> During a liquidation, if a partner’s capital account balance drops below zero, what should happen? a. The other partners file a legal suit against the partner with the deficit balance. b. The partner with the highest capital balance contributes sufficien

> Which of the following statements is true concerning the accounting for a partnership going throughliquidation? a. Gains and losses are reported directly as increases and decreases in the appropriate capitalaccount. b. A separate income statement is crea

> The balance sheet for the Delphine, Xavier, and Olivier partnership follows: Delphine, Xavier, and Olivier share profits and losses in the ratio of 4:4:2, respectively. The partnershave agreed to terminate the business and estimate that $12,000 in liqu

> The following condensed balance sheet is for the partnership of Miller, Tyson, and Watson, whoshare profits and losses in the ratio of 6:2:2, respectively: For how much money must the other assets be sold so that each partner receives some amount ofcas

> The following condensed balance sheet is for the partnership of Hardwick, Saunders, and Ferris,who share profits and losses in the ratio of 4:3:3, respectively: The partners decide to liquidate the partnership. Forty percent of the other assets are sol

> What is the purpose of a drawing account in a partnership’s financial records?

> A partnership currently holds three assets: cash, $10,000; land, $35,000; and a building, $50,000.The partnership has no liabilities. The partners anticipate that expenses required to liquidate theirpartnership will amount to $5,000. Capital balances are

> A local dental partnership has been liquidated and the final capital balances are Atkinson, capital (40% of all profits and losses) . . . . . . . . . $ 70,000 Kaporale, capital (30%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000 De

> A local partnership is liquidating and has only two assets (cash of $10,000 and land with a cost of$35,000). All partnership liabilities have been paid. All partners are personally insolvent. The partnershave capital balances and share profits and losses

> A partnership has the following account balances: Cash, $70,000; Other Assets, $540,000; Liabilities,$260,000; Nixon (50 percent of profits and losses), $170,000; Cleveland (30 percent),$110,000; Pierce (20 percent), $70,000. The company liquidates, and

> A partnership has gone through liquidation and now reports the following account balances: Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,000 Loan from Jones . . . . . . . . . . . . . . . . . . . . . . . . 3,000 Wayman, capital

> Carney, Pierce, Menton, and Hoehn are partners who share profits and losses on a 4:3:2:1 basis, respectively.They are beginning to liquidate the business. At the start of this process, capital balances are Carney, capital. . . . . . . . . . . . . . . . .

> A partnership is currently holding $400,000 in assets and $234,000 in liabilities. The partnershipis to be liquidated, and $20,000 is the best estimation of the expenses that will be incurred duringthis process. The four partners share profits and losses

> A partnership has the following capital balances: X (50 percent of profits and losses) = $150,000; Y(30 percent of profits and losses) = $120,000; Z (20 percent of profits and losses) = $80,000. If thepartnership is to be liquidated and $30,000 becomes i

> A partnership has the following balance sheet prior to liquidation (partners’ profit and loss ratiosare in parentheses): During liquidation, other assets are sold for $80,000, liabilities are paid in full, and $15,000 inliquidation ex

> A partnership is considering possible liquidation because one of the partners (Bell) is personallyinsolvent. Profits and losses are divided on a 4:3:2:1 basis, respectively. Capital balances at the currenttime are Bell, capital . . . . . . . . . . . . .

> If a partner is contributing attributes to a partnership such as an established clientele or a particularexpertise, what two methods can be used to record the contribution? Describe each method.

> A local partnership is liquidating and is currently reporting the following capital balances: Barley, capital (50% share of all profits and losses) . . . . . $ 44,000 Carter, capital (30%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

> Part A The partnership of Butler, Osman, and Ward was formed several years as a local tax preparationfirm. Two partners have reached retirement age and the partners have decided to terminate operationsand liquidate the business. Liquidation expenses of $

> Part A The partnership of Wingler, Norris, Rodgers, and Guthrie was formed several years ago as a localarchitectural firm. Several partners have recently undergone personal financial problems and havedecided to terminate operations and liquidate the busi

> The partnership of Frick, Wilson, and Clarke has elected to cease all operations and liquidate itsbusiness property. A balance sheet drawn up at this time shows the following account balances: Part A Prepare a predistribution plan for this partnership

> Following is a series of independent cases. In each situation, indicate the cash distribution to bemade to partners at the end of the liquidation process. Unless otherwise stated, assume that all solventpartners will reimburse the partnership for their d

> On January 1, the partners of Van, Bakel, and Cox (who share profits and losses in the ratio of5:3:2, respectively) decide to liquidate their partnership. The trial balance at this date follows: The partners plan a program of piecemeal conversion of th

> The partnership of Winn, Xie, Yang, and Zed has the following balance sheet: Zed is personally insolvent, and one of his creditors is considering suing the partnership for the$10,000 that is currently owed. The creditor realizes that this litigation co

> March, April, and May have been in partnership for a number of years. The partners allocate allprofits and losses on a 2:3:1 basis, respectively. Recently, each partner has become personallyinsolvent and, thus, the partners have decided to liquidate the

> The partnership of Anderson, Berry, Hammond, and Winwood is being liquidated. It currentlyholds cash of $20,000 but no other assets. Liabilities amount to $30,000. The capital balances are Anderson (40% of profits and losses) . . . . . . . . . . . . . .

> The partnership of Hendrick, Mitchum, and Redding has the following account balances: This partnership is being liquidated. Hendrick and Mitchum are each entitled to 40 percent of allprofits and losses with the remaining 20 percent going to Redding. a.

> What valuation should be recorded for noncash assets transferred to a partnership by one of thepartners?

> The Drysdale, Koufax, and Marichal partnership has the following balance sheet immediately priorto liquidation: a. Liquidation expenses are estimated to be $15,000. Prepare a predistribution schedule to guidethe distribution of cash. b. Assume that ass

> The partnership of Larson, Norris, Spencer, and Harrison has decided to terminate operations andliquidate all business property. During this process, the partners expect to incur $8,000 in liquidationexpenses. All partners are currently solvent. The bala

> Alex and Bess have been in partnership for many years. The partners, who share profits and losses on a60:40 basis, respectively, wish to retire and have agreed to liquidate the business. Liquidation expensesare estimated to be $5,000. At the date the par

> The following balance sheet is for a local partnership in which the partners have become veryunhappy with each other. To avoid more conflict, the partners have decided to cease operations and sell all assets. Using thisinformation, answer the following

> A partnership has liquidated all assets but still reports the following account balances: The partners split profits and losses as follows: Cisneros, 40 percent; Beck, 20 percent; Sadak,10 percent; Emerson, 20 percent; and Page 10 percent Beck, loan . .

> According to the Uniform Partnership Act, what events should occur if a partner incurs a negativecapital balance during the liquidation process?

> Why would the members of a partnership elect to terminate business operations and liquidate allnoncash assets?

> What is the difference between the dissolution of a partnership and the liquidation of partnershipproperty?

> How is a predistribution plan created for a partnership liquidation?

> What is an articles of partnership agreement, and what information should this document contain?

> What is the purpose of a proposed schedule of liquidation, and how is it developed?

> How do loans from partners affect the distribution of assets in a partnership liquidation?

> How are safe capital balances computed when preliminary distributions of cash are to be made in apartnership liquidation?

> What is the purpose of a statement of liquidation? What information does it convey to its readers?

> After liquidating all property and paying partnership obligations, what is the basis for allocatingremaining cash among the partners?

> Why are liquidation gains and losses usually recorded as direct adjustments to the partners’ capitalaccounts?

> Erin Carson, Megyn Delaney, and Caitlin Erikson form a partnership as a first step in creating a business.Carson invests most of the capital but does not plan to be actively involved in the day-to-dayoperations. Delaney has had some experience and is exp

> Go to the Buckeye Partners, L.P. website where forms filed with the SEC are available through the InvestorCenter. Find Buckeye’s recent annual financial statements in their 10–K report for the partnership. Required Review Buckeye’s financial statements

> The Ace and Deuce partnership has been created to operate a law firm. The partners are attempting to devise a fair system to allocate profits and losses. Ace plans to work more billable hours each year than Deuce. However, Deuce has more experience and c

> 1. Kelly Fernandez and Michael Webster have decided to create a business. They have financing available and have a well-developed business plan. However, they have not yet decided which type of legal business structure would be best for them. Required W

> A company is being created and the owners are trying to decide whether to form a general partnership,a limited liability partnership, or a limited liability company. What are the advantages anddisadvantages of each of these legal forms?

> Which of the following is not a reason for the popularity of partnerships as a legal form forbusinesses? a. Partnerships may be formed merely by an oral agreement. b. Partnerships can more easily generate significant amounts of capital. c. Partnerships a

> Which of the following best describes the articles of partnership agreement? a. The purpose of the partnership and partners’ rights and responsibilities are required elements ofthe articles of partnership. b. The articles of partnership are a legal coven

> How does partnership accounting differ from corporate accounting? a. The matching principle is not considered appropriate for partnership accounting. b. Revenues are recognized at a different time by a partnership than is appropriate for a corporation. c

> If instead the partnership uses the bonus method, what is the balance of Manning’s capital accountafter Clark withdraws? a. $100,000 b. $126,250 c. $130,000 d. $133,750 At year-end, the Circle City partnership has the following capital balances: Manning

> The payment made to Clark beyond his capital account was for Clark’s share of previously unrecognizedgoodwill. After recognizing partnership goodwill, what is Manning’s capital balance afterClark withdraws? a. $133,000 b. $137,500 c. $140,000 d. $145,000

> A partnership has the following capital balances: Allen, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $60,000 Burns, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000 Costello, Capital . . . . . . . . . . . . .

> A partnership begins its first year of operations with the following capital balances: Winston, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . $110,000 Durham, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000 Salem, Cap

> A partnership begins its first year with the following capital balances: Alfred, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50,000 Bernard, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000 Collins, Capital . .

> The capital balance for Messalina is $210,000 and for Romulus is $140,000. These two partnersshare profits and losses 60 percent (Messalina) and 40 percent (Romulus). Claudius invests $100,000in cash in the partnership for a 20 percent ownership. The bon

> Bishop has a capital balance of $120,000 in a local partnership, and Cotton has a $90,000 balance.These two partners share profits and losses by a ratio of 60 percent to Bishop and 40 percent toCotton. Lovett invests $60,000 in cash in the partnership fo

> Describe the differences between a Subchapter S corporation and a Subchapter C corporation.

> The capital balance for Maxwell is $110,000 and for Russell is $40,000. These two partners shareprofits and losses 70 percent (Maxwell) and 30 percent (Russell). Evan invests $50,000 in cashinto the partnership for a 30 percent ownership. The bonus metho

> A partnership has the following capital balances: Comprix (35% of gains and losses) . . . . . . . . . . $150,000 Heflin (40%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000 Kaplan (25%) . . . . . . . . . . . . . . . . . . . . . . . .

> A partnership has the following capital balances: Henry (50% of gains and losses) . . . . . . . . . . . . $ 135,000 Thomas (30%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85,000 Catherine (20%) . . . . . . . . . . . . . . . . . . . . . .

> Pat, Jean Lou, and Diane are partners with capital balances of $50,000, $30,000, and $20,000, respectively.These three partners share profits and losses equally. For an investment of $50,000 cash (paid tothe business), MaryAnn will be admitted as a partn

> The Distance Plus partnership has the following capital balances at the beginning of the current year: Tiger (50% of profits and losses) . . . . . . . . . . . $85,000 Phil (30%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000 Ernie (

> Lear is to become a partner in the WS partnership by paying $80,000 in cash to the business. Atpresent, the capital balance for Hamlet is $70,000 and for MacBeth is $40,000. Hamlet and MacBeth share profits on a 7:3 basis. Lear is acquiring 40 percent of

> Darrow invests $250,000 in cash for a 30 percent ownership interest. The money goes to the business.No goodwill or other revaluation is to be recorded. After the transaction, what is Jennings’scapital balance? a. $160,000 b. $168,000 c. $170,200 d. $171,

> Darrow invests $270,000 in cash for a 30 percent ownership interest. The money goes to the originalpartners. Goodwill is to be recorded. How much goodwill should be recognized, and what isDarrow’s beginning capital balance? a. $410,000 and $270,000 b. $1

> Steve Reese is a well-known interior designer in Fort Worth, Texas. He wants to start his own businessand convinces Rob O’Donnell, a local merchant, to contribute the capital to form a partnership.On January 1, 2016, O’Donnell invests a building worth $5

> A partnership of attorneys in the St. Louis, Missouri, area has the following balance sheet accountsas of January 1, 2018: According to the articles of partnership, Athos is to receive an allocation of 50 percent of allpartnership profits and losses wh

> What information do the capital accounts found in partnership accounting convey?

> The law firm of Hackney and Walton has decided to start supporting a worthy charity. The partners want to select an organization that makes good use of its resources to meet its stated mission. Go to the website www.give.org. Click on “For Donors.” Scrol

> Go to the website https://www.independentsector.org/governance_ethics_resource_center and download the organization’s 33 Principles. Read the explanation for the six principles under the heading of Strong Financial Oversight. Write a short report on the

> Go to the website of a private not-for-profit college or university such as Duke (www.duke.edu), Vanderbilt (www.vanderbilt.edu), Notre Dame (www.nd.edu), or Georgetown (www.georgetown.edu) and locate the latest set of financial statements for the instit

> Go to the website of a private voluntary health and welfare entity such as United Cerebral Palsy (www.ucp.org), the American Heart Association (www.americanheart.org), or the American Cancer Society (www.cancer.org). Find the charity’s latest financial s

> Go to the following URL for Georgetown University: http://financialaffairs.georgetown.edu/gta/statements.html. Click on the link for the most recent set of financial statements for the university. Look through those statements. Then, click on the link fo

> Go to the website www.guidestar.org and enter the name of a private not-for-profit organization. Considerable information will be available about the entity. By registering, it should be possible to find a link to the Form 990 (Return of Organization Exe

> Go to www.charitynavigator.org and click on “Methodology” near the top of the page. Read the information that is provided and write a short memo to explain how this organization rates charities.

> Gray, Stone, and Lawson open an accounting practice on January 1, 2016, in San Diego, California,to be operated as a partnership. Gray and Stone will serve as the senior partners because oftheir years of experience. To establish the business, Gray, Stone