Partnership Liquidation Problem Solutions PDF

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Professor Beck Fall 2015 Accountancy 510 Partnership Problem Homework Solutions for New textbook Problems Liquidation Chapter Solutions to Representative problems Problem 4. The $12,000 deficit of Cassidy must be reallocated to Angela and Woodrow on a 5/8 and 3/8 basis:

Capital revised P&L Ratio Loss Allocation Capital after Loss Allocation

Angela Woodrow 19,000.0 18,000.0 0 0 0.625 0.375 -7,500.00 -4,500.00 11,500.0 13,500.0 0 0

Cassidy -12,000.00 12,000.00

Answer is B

Problem 5 Carrying Value Less: Liquidation Value Loss on Liquidation

300,000.00 190,000.00 110,000.00

P&L Ratio

0.4

Bell

Capital Loss Allocation Capital after Loss Alloc 2nd Round P&L Ratio 2nd Round Loss Allocation Capital After 2nd Round Loss Alloc

0.3

Hardy

0.2

Dennard

14,000.00 -22,000.00 -8,000.00

0.1

Suddath

50,000.00 -44,000.00 6,000.00

56,000.00 -33,000.00 23,000.00

80,000.00 -11,000.00 69,000.00

0.5

0.375

0.125

-4000

-3000

-1000

2,000.00

20,000.00

68,000.00

Loss from Liquidatio n 110,000.0 0

-8,000.00

Deficit Allocation

Answer is B since Bells gets $2,000 from partnership so his creditors would receive that amount.

Problem 8 Cash Pre-distribution Plan Problem 8 B 120,000.00 0.30 400,000.00

C 180,000.00 0.50 360,000.00

A B Capital 100,000.00 120,000.00 Loss Allocation OF LAP#1 -72,000.00 -108,000.00 Capital after Loss Alloc 28,000.00 12,000.00 LAP#2 70,000.00 20,000.00 Partner B is next weakest partner with LAP of $20, 000 Revised P&L Ratios 0.4 0.6 Capital after Loss Alloc from Round 1 28,000.00 12,000.00 Loss Alloc of LAP 2 -8,000.00 -12,000.00 Capital after Loss Alloc from Round 2 20,000.00 0.00

C 180,000.00 -180,000.00 0.00

Capital P&L Ratio LAP#1 C is weakest partner with $28,000 LAP

A 100,000.00 0.20 500,000.00

After creditors are paid, The first $20,000 of cash collections from asset sales goes 100% to A. The next $20,000 of cash from asset sales is allocated 40% to A and 60% to B All additional cash is allocated 20% to A, 30% to B, and 50% to C (uses original P&L ratios) The problem assumes that $30,000 is available for distribution A B First 20,000.00 20,000.00 Next 10,000.00 4000 6000 Totals from first 30,000 24,000.00 6,000.00

The answer is D since A gets $24,000, B gets $6,000, and C gets $0...