Chapter 14 - Financial Accounting and reporting Millan PDF

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Problem 1 FALSE TRUE TRUE FALSE FALSE Problem 3:1. Requirement:a) Collection on accounts receivable 130, b) Sale of inventory 200, c) Sale of equipment 590, d) Liquidation expense (5,000) Net cash proceeds: 915, less: carrying amount of non cash assets (1,300,000) Total loss on sale (385,000)A(50%) ...

Description

Problem 1 1.

FALSE

2.

TRUE

3.

TRUE

4.

FALSE

5.

FALSE

Problem 3: 1. Requirement: a) Collection on accounts receivable b) Sale of inventory c) Sale of equipment d) Liquidation expense Net cash proceeds: less: carrying amount of non cash assets Total loss on sale

Capital Balances Payable to A total Allocation of loss (385K) x 50%;40%;10% Amts. received by partners

130,000 200,000 590,000 (5,000) 915,000 (1,300,000) (385,000)

A(50%) B(40%) C(10%) Totals 600,000 420,000 170,000 1,190,000 50,000 50,000 650,000 420,000 170,000 1,240,000

(192,500) 457,500

( 154,000) ( 38,500) 266,000

131,500

( 385,000) 855,0 00

checking: Beginning cash balance Net proceeds Payment to outside creditors Cash available for distribution to partners

40,000 915,000 -100,000 855,000

2. a.) Collection of Accounts receivable b. Sale of inventory c.) Sale of equipment d.) Actual Liquidation expense e. Estimated iquidation expense f. Cash retained for futureexpenses Net cash proceeds less: carrying amount of all noncash assets Total loss

60,000 40,000 220,000 (2,000) (3,000) (10,000) 305,000 (1,300,000) (995,000)

A(50%) Capital Balances Payable to A total

B(40%)

600,000

C(10%)

420,000

50,000 650,000

420,000

Totals 1,190,00 170,000 0 50,000 1,240,00 170,000 0

Allocation of loss (995K) x 50%;40%;10%

Amts received by partners

( ( 497,500)

152,500

(398,000)

22,000

99,500)

(995,00 0)

70,500

245,00 0

checking: Beginning cash balance Net proceeds Payment to outside creditors Cash available for distribution to partners

40,000 305,000 (100,000) 245,000

3. a.) Collection of Accounts receivable b. Sale of inventory c.) Sale of equipment d.) Actual Liquidation expense e. Estimated liquidation expense f. Cash retained for future expenses Net cash proceeds less: carrying amount of all noncash assets Total loss on sale

Capital Balances Payable to A total Allocation of loss (1.075M) x 50%;40%;10% totals

40,000 70,000 130,000 (2,000) (3,000) (10,000) 225,000 (1,300,000) (1,075,000)

A(50%) B(40%) C(10%) Totals 600,000 420,000 170,000 1,190,000 50,000 50,000 650,000 420,000 170,000 1,240,000 0 (537,500) (430,000) 112,500

Additional Contribution of B Amts. Received by partners 112,500

(10,000) 10,000 -

(107,500) (1,075,000) 62,500 165,000 10,000 175,0 62,500 00

checking: Beginning cash balance Net proceeds Additional Contribution by B Payment to outside creditors Cash available for distribution to partners

40,000 225,000 10,000 (100,000) 175,000

4. a.) Collection of Accounts receivable b. Sale of inventory c.) Sale of equipment

40,000 70,000 130,000

d.) Actual Liquidation expense e. Estimated liquidation expense f. Cash retained for future expenses Net cash proceeds less: carrying amount of all noncash assets Total loss

Capital Balances Payable to A total Allocation of loss (1.075M) x 50%;40%;10% totals Allocation of Capital deficiency to other partners (10k) x 50%/60%; x10%/60% Amounts received by partners

(2,000) (3,000) (10,000) 225,000 (1,300,000) (1,075,000)

A(50%) B(40%) C(10%) Totals 600,000 420,000 170,000 1,190,000 50,000 50,000 650,000 420,000 170,000 1,240,000

(537,500) (430,000) 112,500

(10,000)

(8,333.33) 10,000

(107,500)

( 1,075,000 )

62,500 165,000

(1,666.67) 165,0

104,166.67

-

60,833.33 00

checking: beginning cash balance net proceeds payment to outside creditors Cash available for distribution to partners

40,000 225,000 (100,000) 165,000

5. Step 1: A(50%) Payable to A Capital balances before liquidation

B(40%)

C(10%)

50,000 600,000

420,000

170,000

Total interest in the partnership Divide by: P/L percentage

650,000 50%

Max. Loss absorption capacity

1,300,000

Rank of payment

420,000 40% 1,050,000

1,700,000 3rd

2nd

170,000 10%

1st

Step 2: Rank of payment Max. Loss absorption capacity

A(50%) 2nd

B(40%) 3rd

C(10%) 1st

1,300,000

1,050,000

1,700,000

Difference between 1st and 2nd Balance

(400,000)

1,300,000

Difference between 1st, 2nd and 3rd Equal balance of MLAC

1,050,000

1,300,000 (250,000)

(250,000) 1,050,000

1,050,000

1,050,000

Cash Priority Program Rank of payment 1st priority (400,000x10%) 2nd priority (250k x 50% & 10%) Totals

A(50%) 2nd

B(40%) 3rd

C(10%) 1st 40,000 25,000

125,000 125,000

1. C is paid 40,000 first 2. A and C are paid 125,000 and 65,000 respectively 3. Remaining balance will be distributed according to P/L ratio

65,000

6. a.) Collection of Accounts receivable b. Sale of inventory c.) Sale of equipment d.) Actual Liquidation expense e. Estimated liquidation expense f. Cash retained for future expenses Net cash proceeds Add: Cash balance, beg. Less: Accounts payable Cash available for distribution to partners

A(50%) Available cash Allocation 1st priority 2nd priority Balance Payment after priorities 1st installment payment

Problem 4: 1.

B

2.

A

3.

C

4.

D

5.

C

6.

D

7.

A

8.

D

9.

D

125,000

60,000 40,000 220,000 (2,000) (3,000) (10,000) 305,000 40,000 (100,000) 245,000

B(40%)

C(10%)

Total 245,000

40,000 (40,000) 25,000 (150,000) 55,000

27,500 22,000 5,500 (55,000) 152,500 22,000 70,500

10. A...