Ch15 – Partnerships Termination and + Test Bank + Answers

Student name:__________

MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question.
1) When a partnership is insolvent and a partner has a deficit capital account balance, that partner should:

A) Declare personal bankruptcy.
B) Initiate legal proceedings against the partnership.
C) Contribute enough cash to the partnership to offset their deficit.
D) Deliver a note payable to the partnership with specific payment terms.
E) None of these answer choices are correct. The partner has no legal responsibility to cover the capital deficit balance.

2) The Allen, Bevell, and Carter partnership began the process of liquidation with the following balance sheet:

Allen, Bevell, and Carter share profits and losses in a ratio of 3:2:5. Liquidation expenses are expected to be $14,000.If the noncash assets were sold for $275,000, what amount of the loss would have been allocated to Bevell with respect to the noncash assets?

A) $55,000.
B) $50,000.
C) $45,000.
D) $46,800.
E) $42,400.

3) The Allen, Bevell, and Carter partnership began the process of liquidation with the following balance sheet:

Allen, Bevell, and Carter share profits and losses in a ratio of 3:2:5. Liquidation expenses are expected to be $14,000.Assuming that the noncash assets were sold for $150,000, which partner(s) would have been required to contribute assets to the partnership to cover a deficit in his or her capital account, prior to considering the liquidation expenses incurred?

A) Allen.
B) Bevell.
C) Carter.
D) Allen and Carter.
E) Allen and Bevell.

4) The Allen, Bevell, and Carter partnership began the process of liquidation with the following balance sheet:

Allen, Bevell, and Carter share profits and losses in a ratio of 3:2:5. Liquidation expenses are expected to be $14,000.Assuming that, after the payment of liquidation expenses in the amount of $14,000 was made and the noncash assets were sold, if Carter has a deficit of $10,000, for what amount would the noncash assets have been sold?

A) $174,000.
B) $188,000.
C) $160,000.
D) $146,000.
E) $185,000.

5) The Keller, Long, and Mason partnership had the following balance sheet just before entering liquidation:

Keller, Long, and Mason share profits and losses in a ratio of 2:4:4.Assume that noncash assets were sold for $60,000 and liquidation expenses in the amount of $18,500 were incurred. If Long was personally insolvent and could not contribute any assets to the partnership, and Keller and Mason were both solvent, what amount of cash would Keller receive from the distribution of partnership assets?

A) $0.
B) $60,500.
C) $62,300.
D) $58,700.
E) $64,100.

6) The Keller, Long, and Mason partnership had the following balance sheet just before entering liquidation:

Keller, Long, and Mason share profits and losses in a ratio of 2:4:4.Assuming noncash assets were sold for $70,000 and liquidation expenses in the amount of $18,500 were incurred, how much will each partner receive in the liquidation?

A) Option A.
B) Option B.
C) Option C.
D) Option D.
E) Option E.

7) The Keller, Long, and Mason partnership had the following balance sheet just before entering liquidation:

Keller, Long, and Mason share profits and losses in a ratio of 2:4:4.The partnership feels confident it will be able to eventually sell the noncash assets and wants to distribute some cash before paying liabilities. Assuming there will be no liquidation expenses, how much would each partner receive of a total $70,000 distribution of cash?

A) Option A.
B) Option B.
C) Option C.
D) Option D.
E) Option E.

8) The Henry, Isaac, and Jacobs partnership was about to enter liquidation with the following account balances:

Estimated expenses of liquidation were $5,000. Henry, Isaac, and Jacobs shared profits and losses in a ratio of 2:4:4.What amount of cash was available for safe payments, based on the above information?

A) $30,000.
B) $85,000.
C) $25,000.
D) $35,000.
E) $40,000.

9) The Henry, Isaac, and Jacobs partnership was about to enter liquidation with the following account balances:

Estimated expenses of liquidation were $5,000. Henry, Isaac, and Jacobs shared profits and losses in a ratio of 2:4:4.Before liquidating any assets, the partners determined the amount of cash available for safe payments. How should the amount of safe cash payments be distributed?

A) In a ratio of 2:4:4 among all the partners.
B) $18,333 to Henry and $16,667 to Jacobs.
C) In a ratio of 1:2 between Henry and Jacobs.
D) $15,000 to Henry and $10,000 to Jacobs.
E) $21,667 to Henry and $3,333 to Jacobs.

10) The Henry, Isaac, and Jacobs partnership was about to enter liquidation with the following account balances:

Estimated expenses of liquidation were $5,000. Henry, Isaac, and Jacobs shared profits and losses in a ratio of 2:4:4.Before liquidating any assets, the partners determined the amount of cash for safe payments and distributed it. The noncash assets were then sold for $120,000. The liquidation expenses of $5,000 were paid prior to the sale of noncash assets. How would the $120,000 be distributed to the partners? (Hint: Either a predistribution plan or a statement of liquidation would be appropriate for solving this item.)

A) Option A.
B) Option B.
C) Option C.
D) Option D.
E) Option E.

11) The following account balances were available for the Perry, Quincy, and Renquist partnership just before it entered liquidation:

Included in Perry’s Capital account balance is a $20,000 partnership loan owed to Perry. Perry, Quincy, and Renquist shared profits and losses in a ratio of 2:4:4. Liquidation expenses were expected to be $15,000. All partners were insolvent.For what amount would noncash assets need to be sold to generate enough cash in order that at least one partner would receive some cash upon liquidation?

A) Any amount in excess of $185,000.
B) Any amount in excess of $170,000.
C) Any amount in excess of $165,000.
D) Any amount in excess of $95,000.
E) Any amount in excess of $90,000.

12) The following account balances were available for the Perry, Quincy, and Renquist partnership just before it entered liquidation:

Included in Perry’s Capital account balance is a $20,000 partnership loan owed to Perry. Perry, Quincy, and Renquist shared profits and losses in a ratio of 2:4:4. Liquidation expenses were expected to be $15,000. All partners were insolvent.For what amount would the noncash assets need to be sold in order for Quincy to receive some cash from the liquidation?

A) Any amount in excess of $170,000.
B) Any amount in excess of $190,000.
C) Any amount in excess of $260,000.
D) Any amount in excess of $280,000.
E) Any amount in excess of $300,000.

13) A local partnership was in the process of liquidating and reported the following Capital account balances:

Douglass indicated that the $14,000 deficit would be covered by a forthcoming contribution. However, the two remaining partners asked to receive the $31,000 that was then in the cash account.How much of the $31,000 in the cash account should Justice receive?

A) $15,467.
B) $15,533.
C) $17,333.
D) $16,533.
E) $15,867.

14) A local partnership was in the process of liquidating and reported the following Capital account balances:

Douglass indicated that the $14,000 deficit would be covered by a forthcoming contribution. However, the two remaining partners asked to receive the $31,000 that was then in the cash account.How much of this money should Zobart receive?

A) $15,467.
B) $14,467.
C) $17,333.
D) $15,633.
E) $15,867.

15) A local partnership was considering the possibility of liquidation. Capital account balances at that time were as follows. Profits and losses were divided on a 4:2:2:2 basis, respectively.

At that time, the partnership held noncash assets reported at $360,000 and liabilities of $120,000. There was no cash on hand at the time.If the assets could be sold for $228,000 and there are no liquidation expenses, what is the amount that Ding would receive from the liquidation?

A) $36,000.
B) $0.
C) $2,500.
D) $38,720.
E) $67,250.

16) A local partnership was considering the possibility of liquidation. Capital account balances at that time were as follows. Profits and losses were divided on a 4:2:2:2 basis, respectively.

At that time, the partnership held noncash assets reported at $360,000 and liabilities of $120,000. There was no cash on hand at the time.If the assets could be sold for $228,000 and there are no liquidation expenses, what is the amount that Laurel would receive from the liquidation?

A) $36,000.
B) $0.
C) $2,500.
D) $38,250.
E) $67,250.

17) A local partnership was considering the possibility of liquidation. Capital account balances at that time were as follows. Profits and losses were divided on a 4:2:2:2 basis, respectively.

At that time, the partnership held noncash assets reported at $360,000 and liabilities of $120,000. There was no cash on hand at the time.If the assets could be sold for $228,000 and there are no liquidation expenses, what is the minimum amount that Ezzard would receive from the liquidation?

A) $36,000.
B) $0.
C) $2,500.
D) $38,250.
E) $67,250.

18) A local partnership was considering the possibility of liquidation. Capital account balances at that time were as follows. Profits and losses were divided on a 4:2:2:2 basis, respectively.

At that time, the partnership held noncash assets reported at $360,000 and liabilities of $120,000. There was no cash on hand at the time.If the assets could be sold for $228,000 and there are no liquidation expenses, what is the amount that Tillman would receive from the liquidation?

A) $36,000.
B) $0.
C) $2,500.
D) $38,250.
E) $67,250.

19) Dancey, Reese, Newman, and Jahn were partners who shared profits and losses on a 4:2:2:2 basis, respectively. They were beginning to liquidate their business. At the start of the process, Capital account balances were as follows:

Which one of the following statements is true for a predistribution plan?

A) The first available $16,000 would go to Newman.
B) The first available $20,000 would go to Dancey.
C) The first available $8,000 would go to Jahn.
D) The first available $8,000 would go to Newman.
E) The first available $4,000 would go to Jahn.

20) Dancey, Reese, Newman, and Jahn were partners who shared profits and losses on a 4:2:2:2 basis, respectively. They were beginning to liquidate their business. At the start of the process, Capital account balances were as follows:

Which one of the following statements is true for a predistribution plan?

A) The first available $16,000 would go to Newman. The next $12,000 would go $8,000 to Dancey and $4,000 to Newman. The following $32,000 would be shared equally between Dancey, Reese, and Newman. A total distribution of $60,000 would be required before all four partners share any further payments equally.
B) The first available $16,000 would go to Newman. The next $12,000 would go $8,000 to Dancey and $4,000 to Newman. The following $32,000 would be shared by Dancey, Reese, and Newman. The total distribution would be $60,000 before all four partners share any further payments in their profit and loss sharing ratios.
C) The first $20,000 would go to Newman. The next $8,000 would go to Dancey. The next $12,000 would be shared equally by Dancey, Reese, and Newman. The total distribution would be $40,000 before all four partners share any further payments equally.
D) The first available $8,000 would go to Newman. The next $4,000 would be split equally between Dancey and Newman. The following $12,000 would be shared by Dancey, Reese, and Newman. The total distribution would be $24,000 before all four partners share any further payments equally.
E) The first available $8,000 would go to Newman. The next $4,000 would be split equally between Dancey and Newman. The following $12,000 would be shared by Dancey, Reese, and Newman. The total distribution would be $24,000 before all four partners share any further payments in their profit and loss sharing ratios.

21) Which of the following could result in the termination and liquidation of a partnership?1) Partners are incompatible and choose to cease operations.2) There are excessive losses that are expected to continue.3) Retirement of a partner.

A) 1 only.
B) 1 and 2 only.
C) 2 and 3 only.
D) 3 only.
E) 1, 2, and 3.

22) What accounting transactions are not recorded by an accountant during partnership liquidation?

A) The conversion of partnership assets into cash.
B) The allocation of gains and losses from sales of assets.
C) The payment of liabilities and expenses.
D) The initiation of legal action by creditors of the partnership.
E) Write-off of remaining unpaid debts.

23) Which of the following statements is false concerning the partnership Statement of Liquidation?

A) Liquidations may take a considerable length of time to complete.
B) Frequent reporting by the accountant is rarely necessary.
C) The Statement of Liquidation provides a listing of transactions to date, current cash, and capital account balances.
D) The Statement of Liquidation provides a listing of property still held by the partnership as well as liabilities remaining unpaid.
E) The Statement of Liquidation keeps creditors and partners apprised of the results of the process of dissolution.

24) Which of the following is false a regarding a partner's deficit balance?

A) A partner cannot refuse to make contributions to cover their deficit balance.
B) Deficits can occur when the partnership has incurred significant operating losses.
C) Deficits can occur when the sale of noncash assets during the liquidation process results in material losses.
D) The partner with a deficit balance should contribute assets to cover the deficit balance.
E) The other partners may have to absorb the deficit balance.

25) Which of the following statements is true concerning the distribution of safe payments?

A) The distribution of safe payments assumes that any capital deficit balances will prove to be a total loss to the partnership.
B) Safe payments are equal to the recorded capital account balances of those partners with capital account balances in excess of $0.
C) The distribution of safe payments may only be made after all liabilities have been paid.
D) In computing safe payments, partners with positive capital account balances are assumed to absorb an equal share of any deficit balance(s).
E) There are no safe payments until the liquidation is complete.

26) Which one of the following statements is correct?

A) If a partner of a liquidating partnership is unable to pay a capital account deficit, the deficit is absorbed by the other partners in the profit and loss ratio of those partners.
B) Gains and losses from the sale of noncash assets are divided in the ratio of the partners' capital account balances absent an alternate income-sharing plan stated in the partnership agreement.
C) A loan receivable from a partner is added to the partner's capital account balance in the preparation of a cash distribution plan.
D) Partners may not receive any cash before partnership creditors receive cash when liquidating a partnership.
E) All cash payments to partners are made using their profit and loss ratio when liquidating the partnership.

27) Which item is not shown on the statement of partnership liquidation?

A) Current cash balances.
B) Property owned by the partnership.
C) Liabilities still to be paid.
D) Personal assets of the partners.
E) Current capital account balances of the partners.

28) Hanson, James, and Smith, a partnership, is in the process of liquidating. The partners have the following capital account balances; $48,000, $48,000, and ($18,000) respectively. The partners share all profits and losses 16%, 48%, and 36%, respectively. Smith has indicated that the ($18,000) deficit will be covered with a forthcoming contribution. The remaining partners have requested an immediate distribution of $40,000 in cash that is available. How should this cash be distributed?

A) Hanson $10,000; James $30,000.
B) Hanson $34,000; James $6,000.
C) Hanson $22,308; James $17,692.
D) Hanson $28,594; James $11,406.
E) Hanson $25,000; James $15,000.

29) The partnership of Gordon, Handel, and Mitchell is considering possible liquidation because partner Mitchell is personally insolvent. The partners have the following capital account balances: $120,000, $140,000, and $80,000, respectively, and share profits and losses 35%, 45%, and 20%, respectively. The partnership has $400,000 in noncash assets that can be sold for $300,000. The partnership has $20,000 cash on hand, and $80,000 in liabilities. What is the minimum that partner Mitchell’s creditors would receive if they have filed a claim for $100,000?

A) $0.
B) $20,000.
C) $60,000.
D) $80,000.
E) $100,000.

30) White, Sands, and Luke has the following capital account balances and profit and loss ratios:$60,000 (30%); $100,000 (20%); and $200,000 (50%).The partnership has received a predistribution plan.How would $90,000 be distributed?

A) Option A.
B) Option B.
C) Option C.
D) Option D.
E) Option E.

31) White, Sands, and Luke has the following capital account balances and profit and loss ratios:$60,000 (30%); $100,000 (20%); and $200,000 (50%).The partnership has received a predistribution plan.How would $200,000 be distributed?

A) Option A.
B) Option B.
C) Option C.
D) Option D.
E) Option E.

32) A local partnership has assets of cash of $5,000 and a building recorded at $80,000. All liabilities have been paid. The partners’ capital accounts are as follows: Harry $40,000, Landers $30,000 and Waters $15,000. The partners share profits and losses 4:4:2.If the building is sold for $50,000 and there are no liquidation expenses what amount should Harry receive in the final settlement?

A) $5,000.
B) $9,000.
C) $18,000.
D) $28,000.
E) $55,000.

33) A local partnership has assets of cash of $5,000 and a building recorded at $80,000. All liabilities have been paid. The partners’ capital accounts are as follows: Harry $40,000, Landers $30,000 and Waters $15,000. The partners share profits and losses 4:4:2.If the building is sold for $50,000, what amount should Waters receive in the final settlement?

A) $5,000.
B) $9,000.
C) $18,000.
D) $28,000.
E) $55,000.

34) A local partnership has assets of cash of $30,000 and land recorded at $700,000. All liabilities have been paid and the partners are all personally insolvent. The partners’ capital accounts are as follows: Roberts, $500,000, Ferry, $300,000 and Mones, $30,000. The partners share profits and losses 5:3:2.If the land is sold for $450,000, what amount will Roberts receive in the final settlement?

A) $0.
B) $30,000.
C) $217,500.
D) $362,500.
E) $502,500.

35) A local partnership has assets of cash of $30,000 and land recorded at $700,000. All liabilities have been paid and the partners are all personally insolvent. The partners’ capital accounts are as follows: Roberts, $500,000, Ferry, $300,000 and Mones, $30,000. The partners share profits and losses 5:3:2.If the land is sold for $450,000, how much cash will Mones receive in the final settlement?

A) $0.
B) $15,000.
C) $300,000.
D) $217,500.
E) $362,500.

36) At the end of a partnership liquidation, how is any remaining cash distributed to the partners?

A) Based on the individual partners’ final capital balances.
B) Based on their share of profits and losses.
C) Equally.
D) Based on the length of time the partner was with the partnership.
E) Based on the initial investment made by each partner.

37) During a partnership liquidation, how are gains and losses recorded?

A) Accrued in Other Comprehensive Income.
B) Accrued in a Liquidation Gain/Loss account.
C) Directly to Retained Earnings.
D) Directly to the partners’ capital accounts, allocated equally.
E) Directly to the partners’ capital accounts, allocated on the partners’ profit and loss ratio.

38) A proposed schedule of liquidation is developed

A) based on the underlying assumption that all future events will result in total gains.
B) based on the underlying assumption that all partners will remain solvent throughout liquidation.
C) on the first day of each month as required by the Uniform Partnership Act.
D) based on the underlying assumption that all future events will result in total losses.
E) on a weekly basis as required by the Uniform Partnership Act.

39) A partnership has assets of cash of $10,000 and equipment with a book value of $160,000. All liabilities have been paid. The partners’ capital accounts are as follows Michael $80,000, Gregory $60,000 and Phillips $30,000. The partners share profits and losses on a 4:3:3 basis. If the equipment is sold for $100,000 and there are no liquidation expenses what amount should Michael receive in the final settlement?

A) $10,000.
B) $18,000.
C) $20,000.
D) $56,000.
E) $62,000.

40) A partnership has assets of cash of $10,000 and equipment with a book value of $160,000. All liabilities have been paid. The partners’ capital accounts are as follows Michael $80,000, Gregory $60,000 and Phillips $30,000. The partners share profits and losses on a 4:3:3 basis. If the equipment is sold for $100,000 and there are no liquidation expenses what amount should Gregory receive in the final settlement?

A) $10,000.
B) $18,000.
C) $20,000.
D) $36,000.
E) $42,000.

41) A partnership has assets of cash of $10,000 and equipment with a book value of $160,000. All liabilities have been paid. The partners’ capital accounts are as follows Michael $80,000, Gregory $60,000 and Phillips $30,000. The partners share profits and losses on a 4:3:3 basis. If the equipment is sold for $100,000 and there are no liquidation expenses what amount should Phillips receive in the final settlement?

A) $6,000.
B) $12,000.
C) $20,000.
D) $36,000.
E) $42,000.

SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.
42) The Albert, Boynton, and Creamer partnership was in the process of liquidating its assets and going out of business. Albert, Boynton, and Creamer had capital account balances of $80,000, $120,000, and $200,000, respectively, and shared profits and losses in the ratio of 1:3:2. Equipment that had cost $90,000 and had a book value of $60,000 was sold for $24,000 cash.Required:Prepare the appropriate journal entry to record the sale of the equipment, distributing any gain or loss directly to the partners.

43) The Amos, Billings, and Cleaver partnership had two assets: (1) cash of $40,000 and (2) an investment with a book value of $110,000. The ratio for sharing profits and losses is 2:1:1. The balances in the capital accounts were:

Required:If the investment was sold for $80,000, how much cash would each partner receive upon liquidation?

44) As of January 1, 2021, the partnership of Carlin, Yearly, and Granite had the following account balances and percentages for the sharing of profits and losses:

The partnership incurred losses in recent years and decided to liquidate. The liquidation expenses were expected to be $20,000.How much of the existing cash balance could be distributed safely to partners at this time?

45) As of January 1, 2021, the partnership of Carlin, Yearly, and Granite had the following account balances and percentages for the sharing of profits and losses:

The partnership incurred losses in recent years and decided to liquidate. The liquidation expenses were expected to be $20,000.What would be the maximum amount Granite might have to contribute to the partnership to eliminate a deficit balance in his account?

46) As of January 1, 2021, the partnership of Carlin, Yearly, and Granite had the following account balances and percentages for the sharing of profits and losses:

The partnership incurred losses in recent years and decided to liquidate. The liquidation expenses were expected to be $20,000.How much cash should each partner receive at this time, pursuant to a proposed schedule of liquidation?

47) As of January 1, 2021, the partnership of Carlin, Yearly, and Granite had the following account balances and percentages for the sharing of profits and losses:

The partnership incurred losses in recent years and decided to liquidate. The liquidation expenses were expected to be $20,000.If the noncash assets are sold for $210,000, what would be the maximum amount of cash that Carlin could expect to receive?

48) A partnership had the following account balances: Cash, $91,000; Other Assets, $702,000; Liabilities, $338,000; Polk, Capital (50% of profits and losses), $221,000; Garfield, Capital (30%), $143,000; Arthur, Capital (20%), $91,000. The company liquidated and $10,400 became available to the partners.Required:Who would have received the $10,400?

49) A partnership held three assets: Cash, $13,000; Land, $45,000; and a Building, $65,000. There were no recorded liabilities. The partners anticipated that expenses required to liquidate their partnership would amount to $6,000. Capital account balances were as follows:

The partners shared profits and losses 3:3:2:2, respectively.Required:Prepare a proposed schedule of liquidation, showing how cash could be safely distributed to the partners at this time.

50) On January 1, 2021, the partners of Won, Cadel, and Dax (who shared profits and losses in the ratio of 5:3:2, respectively) decided to liquidate their partnership. The trial balance at this date was as follows:

The partners planned an installment program to dispose of the business assets and to minimize liquidation losses. All available cash, less an amount retained to provide for future expenses, was to be distributed to the partners at the end of each month. A summary of liquidation transactions follows:

Prepare a schedule to calculate the safe payments to be made to the partners at the end of January.

51) On January 1, 2021, the partners of Won, Cadel, and Dax (who shared profits and losses in the ratio of 5:3:2, respectively) decided to liquidate their partnership. The trial balance at this date was as follows:

The partners planned an installment program to dispose of the business assets and to minimize liquidation losses. All available cash, less an amount retained to provide for future expenses, was to be distributed to the partners at the end of each month. A summary of liquidation transactions follows:

Prepare a schedule to calculate the safe installment payments to be made to the partners at the end of February.

52) On January 1, 2021, the partners of Won, Cadel, and Dax (who shared profits and losses in the ratio of 5:3:2, respectively) decided to liquidate their partnership. The trial balance at this date was as follows:

The partners planned an installment program to dispose of the business assets and to minimize liquidation losses. All available cash, less an amount retained to provide for future expenses, was to be distributed to the partners at the end of each month. A summary of liquidation transactions follows:

Prepare a schedule to calculate the safe payments to be made to the partners at the end of March.

53) Hardin, Sutton, and Williams have operated a local business as a partnership for several years. All profits and losses have been allocated in a 3:2:1 ratio, respectively. Recently, Williams has undergone personal financial problems, and is insolvent. To satisfy Williams' creditors, the partnership has decided to liquidate.The following balance sheet has been produced:

During the liquidation process, the following transactions take place:- Noncash assets are sold for $116,000.- Liquidation expenses of $12,000 are paid. No further expenses are expected.- Safe capital distributions are made to the partners.- Payment is made of all business liabilities.- Any deficit capital account balances are deemed to be uncollectible.Develop a predistribution plan for this partnership, assuming $12,000 of liquidation expenses are expected to be paid.

54) Hardin, Sutton, and Williams have operated a local business as a partnership for several years. All profits and losses have been allocated in a 3:2:1 ratio, respectively. Recently, Williams has undergone personal financial problems, and is insolvent. To satisfy Williams' creditors, the partnership has decided to liquidate.The following balance sheet has been produced:

During the liquidation process, the following transactions take place:- Noncash assets are sold for $116,000.- Liquidation expenses of $12,000 are paid. No further expenses are expected.- Safe capital distributions are made to the partners.- Payment is made of all business liabilities.- Any deficit capital account balances are deemed to be uncollectible.Compute safe cash payments after the noncash assets have been sold and the liquidation expenses have been paid.

55) Hardin, Sutton, and Williams have operated a local business as a partnership for several years. All profits and losses have been allocated in a 3:2:1 ratio, respectively. Recently, Williams has undergone personal financial problems, and is insolvent. To satisfy Williams' creditors, the partnership has decided to liquidate.The following balance sheet has been produced:

During the liquidation process, the following transactions take place:- Noncash assets are sold for $116,000.- Liquidation expenses of $12,000 are paid. No further expenses are expected.- Safe capital distributions are made to the partners.- Payment is made of all business liabilities.- Any deficit capital account balances are deemed to be uncollectible.Prepare journal entries to record the actual liquidation transactions.

56) Jones, Marge, and Tate LLP decided to dissolve and liquidate the partnership on September 30, 2021. After realization of a portion of the noncash assets, the capital account balances were Jones $50,000; Marge $40,000; and Tate $15,000. Cash of $35,000 and other assets with a carrying amount of $100,000 were on hand. Creditors' claims totaled $30,000. Jones, Marge, and Tate shared net income and losses in a 2:1:1 ratio, respectively.Prepare a working paper to compute the amount of cash that may be paid to creditors and to partners at this time, assuming that no partner is solvent.

57) The balance sheet of Rogers, Dennis & Berry LLP prior to liquidation included the following:

The three partners shared net income and losses in a 5:3:2 ratio, respectively. Noncash assets were sold for $60,000. Creditors were paid in full, partners were paid $35,000, and the balance of cash was retained pending future developments.Record the journal entry for the sale of the noncash assets.

58) The balance sheet of Rogers, Dennis & Berry LLP prior to liquidation included the following:

The three partners shared net income and losses in a 5:3:2 ratio, respectively. Noncash assets were sold for $60,000. Creditors were paid in full, partners were paid $35,000, and the balance of cash was retained pending future developments.Record the journal entry for payment of outstanding liabilities to the creditors.

59) The balance sheet of Rogers, Dennis & Berry LLP prior to liquidation included the following:

The three partners shared net income and losses in a 5:3:2 ratio, respectively. Noncash assets were sold for $60,000. Creditors were paid in full, partners were paid $35,000, and the balance of cash was retained pending future developments.Determine the cash to be retained and prepare a schedule to distribute $35,000 cash to the partners.

60) The balance sheet of Rogers, Dennis & Berry LLP prior to liquidation included the following:

The three partners shared net income and losses in a 5:3:2 ratio, respectively. Noncash assets were sold for $60,000. Creditors were paid in full, partners were paid $35,000, and the balance of cash was retained pending future developments.Record the journal entry for the cash distribution to the partners.

61) The partners of Donald, Chief & Berry LLP decided to liquidate on August 1, 2021. The balance sheet of the partnership is as follows, with the profit and loss ratio of 25%, 45%, and 30%, respectively. The partners do not expect to incur further liquidation expenses.

A portion of the Other Assets with a carrying amount of $200,000 were sold for $140,000, and all available cash was distributed.Prepare the journal entry for Donald, Chief & Berry LLP on August 1, 2021, to recognize proceeds from the sale of Other Assets.

62) The partners of Donald, Chief & Berry LLP decided to liquidate on August 1, 2021. The balance sheet of the partnership is as follows, with the profit and loss ratio of 25%, 45%, and 30%, respectively. The partners do not expect to incur further liquidation expenses.

A portion of the Other Assets with a carrying amount of $200,000 were sold for $140,000, and all available cash was distributed.Prepare the journal entry for Donald, Chief & Berry LLP on August 1, 2021, to record payment of liabilities.

63) The partners of Donald, Chief & Berry LLP decided to liquidate on August 1, 2021. The balance sheet of the partnership is as follows, with the profit and loss ratio of 25%, 45%, and 30%, respectively. The partners do not expect to incur further liquidation expenses.

A portion of the Other Assets with a carrying amount of $200,000 were sold for $140,000, and all available cash was distributed.Prepare the journal entry for Donald, Chief & Berry LLP on August 1, 2021, to record the offset of the loan receivable from Donald.

64) The partners of Donald, Chief & Berry LLP decided to liquidate on August 1, 2021. The balance sheet of the partnership is as follows, with the profit and loss ratio of 25%, 45%, and 30%, respectively. The partners do not expect to incur further liquidation expenses.

A portion of the Other Assets with a carrying amount of $200,000 were sold for $140,000, and all available cash was distributed.Prepare the schedule to compute the cash payments to the partners.

ESSAY. Write your answer in the space provided or on a separate sheet of paper.
65) What is the role of the accountant during the liquidation process?

66) The partnership of Rayne, Marin, and Fulton was being liquidated by the partners. Rayne was insolvent and did not have enough assets to pay all his personal creditors. Under what conditions might Rayne’s personal creditors have a claim to some of the partnership assets?

67) The Arnold, Bates, Carlton, and Delbert partnership was liquidating. It had paid all its liabilities and had some assets yet to be sold. The partners had capital account balances of ($50,000), $90,000, $110,000, and $130,000, respectively. There was $40,000 cash available for distribution to the partners. What procedures would be followed to determine the amount of cash that could safely be distributed to each partner?

68) Xygote, Yen, and Zen were partners who were liquidating their partnership. Each partner has a deficit balance in their respective capital account. Assuming all assets from the partnership have been liquidated and all of the liabilities have been paid, how should any additional cash coming into the partnership be distributed to the partners?

69) What is the purpose of a predistribution plan?

70) What financial report would be prepared for a partnership that has begun liquidation but has not yet completed the process? What is the purpose of this report?

71) What events or circumstances might force the termination of a partnership and liquidation of its assets?

72) Describe the content of a journal entry to record a gain or loss resulting from the liquidation of a partnership asset for cash.

73) What should occur when a solvent partner has a deficit balance?

74) Why is a preliminary distribution of partnership assets prepared?

75) What is a safe cash payment?