Accounting

Review Part 2
Partnership
LiquidationProblem
A
= Assume James,
Wade, Bosh and Cole
are partners
sharingprofits 40%;
20%;20%;20%,
respectivel ! "n
Januar #, 20#4,
the agreedto
li$uidate! A alance
sheet prepared on
this date is sho&n as
follo&s'Additional
information'a!(art of
the non)cash assets
are receiva les
from Wade and
Boshamounted to
(*+,000 and (+0,000,
respectivel ! !(art o
f the lia ilities are
salaries pa a le to
James and
Coleamounted
( +,000 and (2+,000,
respectivel !-he
results of li$uidation
are summari.ed
elo&'/e$uirements'
#! o& much is the
total cash
distri uted to
partners for the
month
ofJanuar 12!"n
month of Januar ,
&hat if the cash
&ithheld for
anticipation
ofli$uidating
e penses is (2+,000,
ho& much is the total
possi le loss end of
Januar 1 ! o& much
is the total pa ment
made to creditors
and partners for
themonth of
3e ruar 14! o&
much is the cash
received James
for the cash
pa ment madeto
partners for the
month of
arch1+! o& much is
the cash received
Cole for the cash
pa ment made
topartners for the
month of April1
6.
 o& much is the total
cash receive each
partner as
settlement oftheir
interest under the
agreement that no
partner is o liged to
ma5eadditional
investment for
possi le deficiencies1
*! o& much is the
total loss on
reali.ation1
Problem B
= James, Wade,
Allen and Bosh are
partners sharing
profits andlosses
e$uall ! -he
partnership is
insolvent and is to
 e li$uidated! -
hestatus of the
partnership and each
partner is presented
elo&'
J a m e s W a d
e A l l e n B o s
h
(artnership capital
alance#+0,
000#00,000
6200,00076
0 0 , 0 0 0 7 (erson
al assets6 e c l u s i
ve ofp a r t n e r s h i
p interest7#,0
00,000 00,000
800,000#0,000
(ersonal lia ilities6
e clusive of4
00,000900,0
00+0,000280,
0 0 0 partnership
interest78!Which
of the follo&ing
statement is
TRU
&ith regards to
partnershipcreditors
1a! ust first see5
recover against
Allen ecause he is
personall solvent
and he has a negative
capital alance! !Will
not e paid in full
regardless of ho&
the agreed
legall ecause the
partnership assets
are less than partn
ershiplia ilities!c!Wi
ll have to share
Wade:s interest in
the partnership on
a pro)rata asis &ith
Wade: personal
creditors!d! ave
first claims to
partnership assets
efore an
partner:spersonal
creditors have rights
to the partnership
assets !-he
partnership
creditors ma
o tain recover of
their claimsa!<n the
amount of
(92,+00 from
each partner !3rom
the personal assets
of either James or
Wadec!3rom the pe
rso