Question: Select the correct answer for each of
Select the correct answer for each of the following questions.
1. On January 1, 20X7, the partners of Casey, Dithers, and Edwards, who share profits and losses in the ratio of 5:3:2, decided to liquidate their partnership. On this date, its condensed balance sheet was as follows:
On January 15, 20X7, the first cash sale of other assets with a carrying amount of $150,000 realized $120,000. Safe installment payments to the partners were made on the same date. How much cash should be distributed to each partner?
2. In a partnership liquidation, the final cash distribution to the partners should be made in accordance with the
a. Partners’ profit and loss–sharing ratio.
b. Balances of the partners’ capital accounts.
c. Ratio of the capital contributions by the partners.
d. Ratio of capital contributions less withdrawals by the partners.
(Note: The following information is for questions 3 through 5.)
The balance sheet for the Art, Blythe, and Cooper Partnership is as follows. Figures shown parenthetically reflect agreed-upon profit and loss–sharing percentages.
3. If the firm, as shown on the balance sheet, is dissolved and liquidated by selling assets in installments and if the first sale of noncash assets having a book value of $90,000 realizes $50,000 and all cash available after settlement with creditors is distributed, the respective partners would receive (to the nearest dollar)
4. If the facts are as in question 3 except that $3,000 cash is to be withheld, the respective partners would then receive (to the nearest dollar)
5. If each partner properly received some cash in the distribution after the second sale, if the cash to be distributed amounts to $12,000 from the third sale, and if unsold assets with an $8,000 book value remain, ignoring questions 3 and 4, the respective partners would receive
6. The following condensed balance sheet is for the partnership of Arnie, Bart, and Kurt, who share profits and losses in the ratio of 4:3:3, respectively:
The partners agreed to dissolve the partnership after selling the other assets for $200,000. On dissolution of the partnership, Arnie should receive
a. $0.
b. $40,000.
c. $60,000.
d. $70,000.
Transcribed Image Text:
Assets Liabilities and Capital Cash $ 50,000 Liabilities S 60,000 Other Assets 250,000 Casey, Capital 80,000 Dithers, Capital 90,000 Edwards, Capital 70,000 Total $300,000 Total $300,000 Casey Dithers Edwards $15,000 $51,000 $44,000 а. b. 40,000 45,000 35,000 55,000 33,000 22,000 C. d. 60,000 36,000 24,000 Assets Liabilities and Capital Cash $ 20,000 Liabilities $ 50,000 Other Assets 180,000 Art, Capital (40%) 37,000 Blythe, Capital (40%) 65,000 Cooper, Capital (20%) 48,000 Total $200,000 Total $200,000 Art Blythe Сооper $ 8,000 $ 8,000 $ 4,000 a. b. 6,667 6,667 6,666 C. 13,333 6,667 d. 3,000 17,000 Art Blythe Сооper $ 6,800 $ 6,800 $ 3,400 а. b. 5,667 5,667 5,666 с. 11,333 5,667 d. 1,000 16,000 Art Blythe Сооper $ 4,800 $ 4,800 $ 2,400 a. b. $ 4,000 $ 4,000 $ 4,000 C. 37/150 65/150 48/150 of of of $12,000 $12,000 $12,000 d. $ 0 $ 8,000 $ 4,000 Assets Liabilities and Capital Cash $100,000 Liabilities $150,000 Other Assets 300,000 Arnie, Capital 40,000 Bart, Capital 180,000 Kurt, Capital 30,000 Total $400,000 Total $400,000
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