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    Assignment 3 Lump-Sump Liquidation

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    chxrlttx
    The document describes two problems involving the liquidation of partnerships. Problem 1 involves the Biscotso Partnership which is being liquidated under three scenarios with different amounts received from selling non-cash assets. Problem 2 involves the liquidation of another partnership called Madz, Dzai, and Flow and calculating how assets will be distributed given information about liquidation expenses, sale of non-cash assets, and one partner's personal assets.

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    Assignment 3 Lump-Sump Liquidation

    Uploaded by

    chxrlttx
    72 views1 page
    The document describes two problems involving the liquidation of partnerships. Problem 1 involves the Biscotso Partnership which is being liquidated under three scenarios with different amounts received from selling non-cash assets. Problem 2 involves the liquidation of another partnership called Madz, Dzai, and Flow and calculating how assets will be distributed given information about liquidation expenses, sale of non-cash assets, and one partner's personal assets.

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    Assignment 3 Lump-sump Liquidation

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    The document describes two problems involving the liquidation of partnerships. Problem 1 involves the Biscotso Partnership which is being liquidated under three scenarios with different amounts received from selling non-cash assets. Problem 2 involves the liquidation of another partnership called Madz, Dzai, and Flow and calculating how assets will be distributed given information about liquidation expenses, sale of non-cash assets, and one partner's personal assets.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    72 views1 page

    Assignment 3 Lump-Sump Liquidation

    Uploaded by

    chxrlttx
    The document describes two problems involving the liquidation of partnerships. Problem 1 involves the Biscotso Partnership which is being liquidated under three scenarios with different amounts received from selling non-cash assets. Problem 2 involves the liquidation of another partnership called Madz, Dzai, and Flow and calculating how assets will be distributed given information about liquidation expenses, sale of non-cash assets, and one partner's personal assets.

    Copyright:

    © All Rights Reserved
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    of 1

    Assignment 3

    Comprehensive Problem: Lump-sum Liquidation

    Problem I:
    The Biscotso Partnership is being liquidated. The current balance sheet is shown here.

    Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P 25,000
    Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,000
    Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P145,000
    Liabilities and Partners’ Capital
    Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P 40,000
    Dawdaw, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,000
    Feenay, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65,000
    Hardo, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,000
    Total Liabilities and Partners’ Capital . . . . . . . . . . . . . . . . . . . . . . . P145,000

    Dawdaw, Feenay, and Hardo share profits and losses in a 30:40:30 ratio.

    Required:
    1. Prepare a schedule of partnership liquidation for each of the following three independent
    cases.
    a. The noncash assets are sold for P60,000, and any partner with a deficit is unable to
    eliminate any of the deficit.
    b. The noncash assets are sold for P60,000, and any partner with a deficit is able to in- vest
    cash equal to the amount of the deficit.
    c. The noncash assets are sold for P50,000, and any partner with a deficit is able to in- vest
    up to P8,000 cash in the partnership.

    2. Prepare all necessary journal entries for No. 1 above.

    Problem II
    Madz, Dzai, and Flow are partners in a partnership and share profits and losses 40%, 40%, and 20%,
    respectively. The partners have agreed to liquidate the partnership and anticipate that liquidation
    expenses will total P14,000. Prior to the liquidation, the partnership balance sheet reflects the
    following book values:

    Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P 25,000
    Noncash assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000
    Note payable to Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000
    Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165,000
    Capital, Merz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
    Capital Dechter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,000
    Capital deficit, Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,000)

    Required: Assuming that the actual liquidation expenses are P20,000 and that noncash assets are
    sold for P160,000, determine how the assets will be distributed. Flow has net personal
    assets of P10,000.

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