高级会计学(第10版)习题答案ch16_beams10e_sm.pdf

《高级会计学(第10版)习题答案ch16_beams10e_sm.pdf》由会员分享，可在线阅读，更多相关《高级会计学(第10版)习题答案ch16_beams10e_sm.pdf（24页珍藏版）》请在淘文阁 - 分享文档赚钱的网站上搜索。

1、Chapter 16 PARTNERSHIP LIQUIDATION Answers to Questions 1 Dissolution of a partnership terminates the partnership as a legal entity,but the partnership business may continue under a new agreement.When a partnership is liquidated,however,the partnership is terminated both as a legal and as a business

2、 entity.Thus,a partnership may be dissolved without liquidation,but it may not be liquidated without dissolution.2 A simple partnership liquidation is the liquidation of a solvent partnership in which all partners have equity capital and all gains and losses are realized and recognized before any di

3、stributions are made to the partners.In simple partnership liquidations,only one cash distribution is made and the amounts distributed to individual partners are equal to their predistribution capital account balances.3 The priority ranking for the distribution of assets in liquidation pursuant to R

4、UPA is Rank I Amounts owed to creditors other than partners and amounts owed to partners other than for capital and profits Rank II Amounts due to partners after all assets have been liquidated and liabilities paid.4 The distribution of assets for capital interests(Rank III)prior to the payment of l

5、oan balances to the partners(Rank II)is not in accordance with the Revised Uniform Partnership Act.But the partners may agree to distribute cash or other assets for capital interests before all losses on liquidation are known.With agreement among all partners,distributions to the partners would be b

6、ased on each partners equity(combined capital and loan balances)in relation to his share of possible future losses.A partner with sufficient equity to absorb his share of possible future losses would be included in distributions,but a partner with loans to the partnership would not be included in di

7、stributions until his equity was sufficient to absorb his share of possible future losses.5 The assumptions for determining distributions to partners prior to recognition of all gains and losses on liquidation are(1)all partners are personally bankrupt such that no partner could contribute personal

8、assets into the partnership and(2)all noncash assets are possible losses and should be considered actual losses for purposes of determining amounts to be distributed.In addition,liquidation expenses and probable loss contingencies should be estimated and assumed to be actual losses for purposes of d

9、etermining advance distributions.6 Capital balances represent one factor in determining a partners equity,but loans and advances payable to and receivable from the partnership are factors that must also be considered in calculating safe payments.Partner equities,rather than capital balances,are used

10、 in safe payment schedules in order to avoid making distributions to partners that may end up with debit capital balances;i.e.,owing money to the partnership.7 Safe payment computations per se do not affect ledger account balances.Actual cash distributions based on safe payments computations do redu

11、ce partnership assets and equities and require recognition in ledger accounts.16-2 Partnership Liquidation 8 A statement of partnership liquidation is a summary of transactions and balances for a partnership during its liquidation stage.Such statements provide continuous records of liquidation event

12、s.Interim liquidation statements are particularly helpful in showing the progress that has been made toward liquidation to date and in identifying remaining assets to be liquidated and liabilities to be paid.Interim liquidation statements are helpful to partners and creditors in providing a basis fo

13、r current decisions as well as future planning.Liquidation statements are important legal documents for partnership liquidations that come under the jurisdiction of a court.9 Available cash may be distributed to partners according to their profit and loss sharing ratios only when nonpartner liabilit

14、ies have been satisfied and partner equities(capital and loan balances combined)are aligned with the relative profit and loss sharing ratios of the partners.In the absence of loans or advances payable to or receivables from individual partners,cash can be distributed to partners in their profit and

15、loss sharing ratios when capital balances are in the relative profit and loss sharing ratios of the partners and all nonpartner liabilities have been paid.10 Vulnerability ranks are an ordering of partners on the basis of the adequacy of their equities in the partnership to absorb possible partnersh

16、ip losses.The ordering is typically from the most vulnerable to the least vulnerable.Vulnerability ranks are used in the preparation of assumed loss absorption schedules,which,in turn,are used in the construction of cash distribution plans.11 Partnership insolvency occurs when partnership liabilitie

17、s exceed partnership assets.In this case,all available cash is distributed to partnership creditors.Individual partners will be called upon to use their personal assets to satisfy the remaining claims of the partnership creditors.12 Partners with credit capital balances after all partnership assets

18、have been distributed in liquidation have a claim against partners with debit capital balances.If the partners with debit balances are personally solvent,they should pay amounts equal to their debit balances into the partnership so that partners with credit balances can receive their partnership cla

19、ims in full.If partners with debit capital balances are insolvent,the partners with credit balances will absorb the losses of the insolvent partners with debit capital balances in relation to their relative profit and loss sharing ratios.Chapter 16 16-3 SOLUTIONS TO EXERCISES Solution E16-1 Schedule

20、 of Capital Balances 60%Folly 40%Frill Capital balances January 1,2008$40,000$20,000 January losses:Lumber($40,000 book value-$25,000 sales price)$15,000 (9,000)(6,000)Receivables($25,000-$21,000 collection)4,000 (2,400)(1,600)Capital balances before distribution$28,600$12,400 Cash distribution:Acco

21、unts payable$15,000 Folly 28,600 Frill 12,400 Total cash$56,000 Cash balance:Beginning balance,$10,000+$25,000+$21,000=$56,000 Solution E16-2 Sale of inventory Cash$10,000 Inventory$10,000 To record sale of inventory items.Distribution of cash Accounts payable$5,000 Cash$5,000 To record payment to c

22、reditors.Mike capital$12,600 Nancy capital 6,200 Okey capital 25,200 Cash$44,000 To record distribution of available cash to partners computed as follows:Capital Possible Loss from Balance-Unsold Inventory=Balance Mike capital$15,000$2,400$12,600 Nancy capital 8,000 1,800 6,200 Okey capital 27,000 1

23、,800 25,200 Totals$50,000$6,000$44,000 Solution E16-3 30%Fred 30%Ethel 40%Lucy January 1 balances$85,000$25,000$90,000 Contingency fund of$10,000 (3,000)(3,000)(4,000)Possible losses on asset disposal($120,000)(36,000)(36,000)(48,000)46,000 (14,000)38,000 Loss on Ethels possible defaulta divided 3/7

24、 and 4/7 (6,000)14,000 (8,000)Available cash is distributed 40,000 0 30,000 16-4 Partnership Liquidation a Notice that Ethel would have a debit balance in her capital account if the contingencies occurred and if the assets were a total loss.In order to determine how much cash is available for distri

25、bution,Fred and Lucys balances must absorb Ethels debit balance.Chapter 16 16-5 Solution E16-4 Creditors 50%Jan 30%Kim 20%Lee Beginning balances$60,000$59,000$29,000$52,000 Offset Kims loan (20,000)Loss on sale of assets ($180,000-$120,000)(30,000)(18,000)(12,000)Additional liability 5,000 (2,500)(1

26、,500)(1,000)65,000 26,500(10,500)39,000 Distribute Kims debit balance 5/7,2/7 (7,500)10,500 (3,000)Cash distribution$65,000$19,000 0$36,000 Kim owes$7,500 to Jan and$3,000 to Lee.Solution E16-5 Schedule to Correct Capital Accounts Anita Bernice Colleen Capital(50%)Capital(30%)Capital(20%)December 31

27、,2008 balance$40,000$35,000$25,000 Overvalued inventory$10,000 (5,000)(3,000)(2,000)Corrected balances$35,000$32,000$23,000 The capital balances are adjusted for the error in computing net income in the partners residual equity ratios.Solution E16-6 Schedule to Correct Capital Accounts Ali Bart Carr

28、ie Capital(40%)Capital(20%)Capital(40%)December 31,2008 balance$60,000$25,000$65,000 Undervalued inventory($15,000)6,000 3,000 6,000 Corrected balances$66,000$28,000$71,000 The capital balances are adjusted for the error in computing net income in the partners residual equity ratios.16-6 Partnership

29、 Liquidation Solution E16-7 Evers,Freda,and Grace Partnership Safe Payment Schedule 40%Evers 40%Freda 20%Grace Total Partner equities$100,000$250,000$170,000$520,000 Loss on sale of assets (52,000)(52,000)(26,000)(130,000)48,000 198,000 144,000 390,000 Possible lossesa (84,000)(84,000)(42,000)(210,0

30、00)(36,000)114,000 102,000 180,000 Allocate Evers loss 36,000 (24,000)(12,000)0$90,000$90,000$180,000 a Remaining noncash assets of$200,000 plus contingency fund of$10,000 equals$210,000 possible losses.Cash to distribute:Beginning cash balance of$100,000 plus$170,000 from sale of assets less$10,000

31、 contingency fund equals$260,000.Distribution of cash:Accounts payable$80,000 Freda 90,000 Grace 90,000$260,000 Chapter 16 16-7 Solution E16-8 Jerry,Joan,and Jill Partnership Statement of Partnership Liquidation at November 30,2008 40%50%10%Noncash Jerry Joan Jill Cash Assets Liab.Capital Capital Ca

32、pital Balances Nov.30$8,000$27,000$8,000$10,800$13,200$3,000 Offset receivable from Jerry (3,000)(3,000)Write-off patent (8,000)(3,200)(4,000)(800)Balances after adjustments 8,000 16,000 8,000 4,600 9,200 2,200 Cash distribution:Creditors (4,000)(4,000)Partners (4,000)(4,000)Balances 0$16,000 0$4,60

33、0$9,200$2,200 (This solution assumes that Joan agrees to a distribution of amounts that can be distributed safely.If she does not agree,no distribution can be made to either Joan or Jill.)Jerry,Joan,and Jill Partnership Safe Payments Schedule at November 30,2008 40%50%10%Possible Jerry Joan Jill Los

34、ses Equity Equity Equity Partners equities$4,600$13,200$2,200 Possible inventory losses$16,000 (6,400)(8,000)(1,600)(1,800)5,200 600 Allocate Jerrys deficit 1,800 (1,500)(300)Safe payments to partners 0$3,700$300 16-8 Partnership Liquidation Solution E16-9 Schedule for Phase-out of the Partnership 3

35、0%Alice 40%Betty 30%Carle Total Capital balances$20,000$(120,000)$70,000$(30,000)Creditors recovery from Betty 30,000 30,000 20,000 (90,000)70,000 0 Partnership recovery from Betty a 20,000 20,000 20,000 (70,000)70,000 20,000 Write-off of Bettys deficit (35,000)70,000 (35,000)(15,000)0 35,000 20,000

36、 Partnership recovery from Alice 10,000 10,000 (5,000)35,000 30,000 Write-off of Alices deficit 5,000 (5,000)0 30,000 30,000 Cash distribution to Carle (30,000)(30,000)0 0 a Bettys personal net assets after partnership creditor recovery are$80,000 personal assets-$60,000 personal liabilities=$20,000

37、.Solution E16-10 Daniel,Eric,and Fred Partnership Schedule for Phaseout of Partnership 40%Daniel 30%Eric 30%Fred Capital Capital Capital Total Capital balances$10,000$60,000$(90,000)$(20,000)Freds payment to creditors 20,000 20,000 10,000 60,000 (70,000)0 Freds payment to the partnershipa 40,000 40,

38、000 10,000 60,000 (30,000)40,000 Write-off of Freds deficit in the relative profit sharing ratio of Daniel and Eric 4/7:3/7(17,143)(12,857)30,000 (7,143)47,143 0 40,000 Daniels payment to the partnership for his deficit 5,000 5,000 (2,143)47,143 45,000 Write off of Daniels deficit to Eric 2,143 (2,1

39、43)0 0 45,000 Payment to Eric (45,000)(45,000)0 0 a Freds personal assets of$100,000 less the$40,000 owed to his personal creditors,and less the$20,000 paid to partnership creditors,equals$40,000 available for his debit capital account balance.Chapter 16 16-9 Solution E16-11 Ace,Ben,Cid,and Don Stat

40、ement of Partnership Liquidation for the period June 30 to July 31,2008 Ace(50%)Ben(20%)Cid(20%)Don(10%)Cash Liabilities Capital Capital Capital Capital Balances June 30,2008$200,000$400,000$40,000$10,000$(170,000)$(80,000)July 1,2008 Investment of Ace 200,000 200,000 400,000 400,000 240,000 10,000

41、(170,000)(80,000)July 1,2008 Payment of liabilities (400,000)(400,000)Balances July 1,2008 0 0 240,000 10,000 (170,000)(80,000)July 15,2008 Investment of Cid 100,000 100,000 Investment of Don 80,000 80,000 180,000 240,000 10,000 (70,000)0 Loss on Cids (50,000)(20,000)70,000 Insolvency a 180,000 190,

42、000 (10,000)0 Loss on Bens (10,000)10,000 insolvency 180,000 180,000 0 July 31,2008 Final distribution (180,000)(180,000)0 0 ()Debit capital balance or deduct.a Allocating Cids insolvency to Ace&Ben:70,000*5/7=50,000 Ace,70,000*2/7=20,000 Ben Solution E16-12 Denver,Elsie,Fannie and George Partnershi

43、p Safe Payment Schedule January 31,2008 Possible Losses Denver(20%)Elsie (10%)Fannie(50%)George (20%)Partners equity at 1/1$170,000$80,000$140,000$78,000 January profit/loss transactions:Inventory sale (6,000)(3,000)(15,000)(6,000)Land sale 20,000 10,000 50,000 20,000 Partners equity at 1/31$164,000

44、$87,000$175,000$92,000 Possible losses noncash$395,000 (79,000)(39,500)(197,500)(79,000)Possible losses contingent 20,000 (4,000)(2,000)(10,000)(4,000)$81,000$45,500$(32,500)$9,000 Possible losses Fannie (13,000)(6,500)32,500(13,000)$68,000$39,000$0$(4,000)Possible losses George (2,667)(1,333)4,000$

45、65,333$37,667$0 16-10 Partnership Liquidation Solution E16-12(contd)Payments of$103,000 can be safely made to Denver and Elsie in the amounts shown above.Check:Cash availablea$523,000 Accounts payable$(400,000)Contingencies (20,000)Available to partners$103,000 a(250,000 land+45,000 inv.+28,000 rec.

46、+200,000 cash)Solution E16-13 1 b 2 d 3 a Supporting computations:See cash distribution plan that follows.Vulnerability Rankings Partners Loss Absorption Vulnerability Equitiesa Potential Ranks Quen$45,000 30%$150,000 3 Reed$25,000 50%50,000 1 Stacy$25,000 20%125,000 2 Schedule of Assumed Loss Absor

47、ption Quen Reed Stacy Total Predistribution equities$45,000$25,000$25,000$95,000 Loss to absorb Reed (15,000)(25,000)(10,000)(50,000)30,000 0 15,000 45,000 Loss to absorb Stacy$15,000/40%(22,500)(15,000)(37,500)Balance$7,500 0$7,500 Cash Distribution Plan Priority Quen Reed Stacy Stacy Creditors Cap

48、ital Capital Loan Capital First$50,000 100%Next$7,500 100%Next$37,500 60%26.667%13.333%Remainder 30%50%20%a Equity balance=Equity+/-loans to/from Chapter 16 16-11 Solution E16-14 1 d Answer b is correct for situations in which all partners have equity in partnership assets;in other words,credit capi

49、tal balances.2 d 3 c The debit balance in Mariss capital account should be charged against the loan payable to Maris.4 d Possible 50%Gwen 25%Bill 25%Sissy Losses Capital Capital Capital Net capital balances$40,000$45,000$35,000 Possible loss on inventories$100,000 (50,000)(25,000)(25,000)(10,000)20,

50、000 10,000 Gwens debit balance 50:50 10,000 (5,000)(5,000)Distribution of cash after payment of accounts payable 0$15,000$5,000 5 c Possible 20%Dick 40%Frank 40%Helen Losses Capital Capital Capital Net capital balances$50,000$220,000$155,000 Noncash assets:Accounts receivable$60,000 Inventories 85,0