On January 1, the partners of Van, Bakel, and Cox (who share profits and losses in the ratio of 5:3:2, respectively) decide to terminate operations and liquidate their partnership. The trial balance at this date follows: Cash Accounts receivable Inventory Machinery and equipment, net Van, loan Accounts payable Bakel, loan Van, capital Bakel, capital Cox, capital Totals Debit $ 32,000 94,000 Credit 80,000 217,000 58,000 $ 89,000 48,000 152,000 104,000 88,000 $ 481,000 $ 481,000 The partners plan a program of piecemeal conversion of the partnership's assets to minimize liquidation losses. All available cash, less an amount retained to provide for future expenses, is to be distributed to the partners at the end of each month. A summary of the liquidation transactions follows: January February March Collected $65,000 of the accounts receivable; the balance is deemed uncollectible. Received $52,000 for the entire inventory. Paid $8,000 in liquidation expenses. Paid $80,000 to the outside creditors after offsetting a $9,000 credit memorandum received by the partnership on January 11. Retained $24,000 cash in the business at the end of January to cover liquidation expenses. The remainder is distributed to the partners. Paid $9,000 in liquidation expenses. Retained $12,000 cash in the business at the end of the month to cover additional liquidation expenses. Received $160,000 on the sale of all machinery and equipment. Paid $11,000 in final liquidation expenses. Retained no cash in the business. Prepare proposed schedules of liquidation on January 31, February 28, and March 31 to determine the safe payments made to the partners at the end of each of these three months. January February March Prepare proposed schedule of liquidation to determine the safe payments made to the partners at the end of January. ( deducted should be entered with a minus sign.) January February March VAN, BAKEL, AND COX PARTNERSHIP Proposed Schedule of Liquidation Prepare proposed schedule of liquidation to determine the safe payments made to the partners at the end of February. (Amounts to t be entered with a minus sign.) January 31 Cash Noncash Assets Liabilities Van, Capital and Loan 50% Bakel, Capital and Loan 30% VAN, BAKEL, AND COX PARTNERSHIP Proposed Schedule of Liquidation Cox, Capital 20% February 28 Balances - January 1 88,000 Cash Noncash Assets Liabilities Van, Capital and Loan 50% Bakel, Capital and Loan 30% Cox, Capital 20% Collected accounts receivable Sold inventory Balances before January 31 safe payments Safe payments to partners - January 31 Paid liquidation expenses Balances February 1 0 0 0 0 0 0 Paid accounts payable Paid liquidation expenses Subtotal (actual balances) 0 0 0 0 0 88,000 Subtotal (actual balances) 0 0 0 0 0 0 Maximum loss on assets Maximum loss on assets Maximum liquidation expenses Maximum liquidation expenses Subtotal (potential balances) 0 0 $ 0 0 0 88,000 Subtotal (potential balances) 0 0 0 0 0 0 Allocation of deficit capital balance Allocation of deficit capital balance Safe payments to partners - January 31 $ 0 $ 0 $ 0 $ 0 $ 0 $ 88,000 Safe payments to partners February 28 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 January February March Prepare proposed schedule of liquidation to determine the safe payments made to the partners at the end of March. (Amo should be entered with a minus sign.) VAN, BAKEL, AND COX PARTNERSHIP Proposed Schedule of Liquidation March 31 Van, Cash Noncash Assets Bakel, Capital Liabilities Capital and Loan 50% and Loan 30% Cox, Capital 20% Balances before February 28 safe payments Safe payments to partners - February 28 Balances - March 1 0 0 0 0 0 0 Sold machinery Paid liquidation expenses Subtotal (actual balances) 0 0 0 0 0 0 Safe payments to partners - March 31 Ending balances - March 31 $ 0 $ 0 S 0 $ 0 $ 0 $ 0

On January 1, the partners of Van, Bakel, and Cox (who share profits and losses in the ratio of 5:3:2, respectively) decide to terminate operations and liquidate their partnership. The trial balance at this date follows: Cash Accounts receivable Inventory Machinery and equipment, net Van, loan Accounts payable Bakel, loan Van, capital Bakel, capital Cox, capital Totals Debit $ 32,000 94,000 Credit 80,000 217,000 58,000 $ 89,000 48,000 152,000 104,000 88,000 $ 481,000 $ 481,000 The partners plan a program of piecemeal conversion of the partnership's assets to minimize liquidation losses. All available cash, less an amount retained to provide for future expenses, is to be distributed to the partners at the end of each month. A summary of the liquidation transactions follows: January February March Collected $65,000 of the accounts receivable; the balance is deemed uncollectible. Received $52,000 for the entire inventory. Paid $8,000 in liquidation expenses. Paid $80,000 to the outside creditors after offsetting a $9,000 credit memorandum received by the partnership on January 11. Retained $24,000 cash in the business at the end of January to cover liquidation expenses. The remainder is distributed to the partners. Paid $9,000 in liquidation expenses. Retained $12,000 cash in the business at the end of the month to cover additional liquidation expenses. Received $160,000 on the sale of all machinery and equipment. Paid $11,000 in final liquidation expenses. Retained no cash in the business. Prepare proposed schedules of liquidation on January 31, February 28, and March 31 to determine the safe payments made to the partners at the end of each of these three months. January February March Prepare proposed schedule of liquidation to determine the safe payments made to the partners at the end of January. ( deducted should be entered with a minus sign.) January February March VAN, BAKEL, AND COX PARTNERSHIP Proposed Schedule of Liquidation Prepare proposed schedule of liquidation to determine the safe payments made to the partners at the end of February. (Amounts to t be entered with a minus sign.) January 31 Cash Noncash Assets Liabilities Van, Capital and Loan 50% Bakel, Capital and Loan 30% VAN, BAKEL, AND COX PARTNERSHIP Proposed Schedule of Liquidation Cox, Capital 20% February 28 Balances - January 1 88,000 Cash Noncash Assets Liabilities Van, Capital and Loan 50% Bakel, Capital and Loan 30% Cox, Capital 20% Collected accounts receivable Sold inventory Balances before January 31 safe payments Safe payments to partners - January 31 Paid liquidation expenses Balances February 1 0 0 0 0 0 0 Paid accounts payable Paid liquidation expenses Subtotal (actual balances) 0 0 0 0 0 88,000 Subtotal (actual balances) 0 0 0 0 0 0 Maximum loss on assets Maximum loss on assets Maximum liquidation expenses Maximum liquidation expenses Subtotal (potential balances) 0 0 $ 0 0 0 88,000 Subtotal (potential balances) 0 0 0 0 0 0 Allocation of deficit capital balance Allocation of deficit capital balance Safe payments to partners - January 31 $ 0 $ 0 $ 0 $ 0 $ 0 $ 88,000 Safe payments to partners February 28 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 January February March Prepare proposed schedule of liquidation to determine the safe payments made to the partners at the end of March. (Amo should be entered with a minus sign.) VAN, BAKEL, AND COX PARTNERSHIP Proposed Schedule of Liquidation March 31 Van, Cash Noncash Assets Bakel, Capital Liabilities Capital and Loan 50% and Loan 30% Cox, Capital 20% Balances before February 28 safe payments Safe payments to partners - February 28 Balances - March 1 0 0 0 0 0 0 Sold machinery Paid liquidation expenses Subtotal (actual balances) 0 0 0 0 0 0 Safe payments to partners - March 31 Ending balances - March 31 $ 0 $ 0 S 0 $ 0 $ 0 $ 0

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter12: Accounting For Partnerships And Limited Liability Companies

Section: Chapter Questions

Problem 4PB

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