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Exam 16: Partnerships: Liquidation

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Question 31

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Listen and Hear are thinking of dissolving their partnership.Listen has a friend who told him to complete a "lump-sum" liquidation.Hear wants to complete an "installment" liquidation.They have come to you for advice.What do you recommend and Why?

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A."Lump-sum" liquidation and 'Installmen...

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Question 32

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In the computation of a partner's Loss Absorption Power (LAP) ,which of the following statements is incorrect? I.The computation of LAPs for all partners allows cash to be distributed before all partnership assets have been sold and all creditors have been paid. II) The computation of LAPs for all partners indicates the relative strength of each partner's net capital position so that available cash is distributed in respective loss-sharing ratios.

A) I
B) II
C) Both I and II
D) Neither I nor II

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Question 33

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Bill,Page,Larry,and Scott have decided to terminate their partnership.The partnership's balance sheet at the time they decide to wind up is as follows: During the winding up of the partnership,the other assets are sold for $150,000 and the accounts payable are paid.Page and Larry are personally solvent,but Bill and Scott are personally insolvent.The partners share profits and losses in the ratio of 4:2:1:3. -Based on the preceding information,what amount will be paid out to Bill upon liquidation of the partnership?

During the liquidation of the FGH partnership,a cash distribution was made to all the partners,who share profits and losses 60 percent,20 percent,and 20 percent,respectively.Assuming that the cash distribution referred to was made properly,how much would G receive if an additional $60,000 was distributed?

Which of the following items are important in the determination of safe installment payments to partners? I.Deficits created in capital accounts are distributed to the remaining partners. II) All unsold noncash assets are assumed to be worthless.

Partners Dennis and Lilly have decided to liquidate their business.The following information is available: Dennis and Lilly share profits and losses in a 3:2 ratio.During the first month of liquidation,half the inventory is sold for $60,000,and $60,000 of the accounts payable is paid.During the second month,the rest of the inventory is sold for $45,000,and the remaining accounts payable are paid.Cash is distributed at the end of each month,and the liquidation is completed at the end of the second month. -Refer to the information provided above.Using a safe payments schedule,how much cash will be distributed to Dennis at the end of the first month?

(p.Appendix: A) On a partner's personal statement of financial condition,how should liabilities be valued? I.Present value II) Lower of present value or cash settlement amount

The trial balance of WM Partnership is as follows: Wilfred and Mike decides to incorporate their partnership.The partnership's books will be closed,and new books will be used for W & M Corporation.The following additional information is available: 1.The estimated fair values of the assets follow: 2.All assets and liabilities are transferred to the corporation. 3.The common stock is $10 par.Wilfred and Mike receive a total of 10,000 shares. 4.The partners share profits and losses in the ratio 7:3. -Based on the preceding information,the journal entry on the partnership's books to record the Investment in W&M Corporation Stock will be debited for: