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ACC - The Simon, Haynes, and Jackson partnership

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Question;Following is a series of independent cases. In each situation, indicate the cash distribution to bemade at the end of the liquidation process. Unless otherwise stated, assume that all solvent partnerswill reimburse the partnership for their deficit capital balances.Part AThe Simon, Haynes, and Jackson partnership presently reports the following accounts. Jackson ispersonally insolvent and can contribute only an additional $3,000 to the partnership. Simon is alsoinsolvent and has no available funds.LO4LO1, LO3Part BHough, Luck, and Cummings operate a local accounting firm as a partnership. After workingtogether for several years, they have decided to liquidate the partnership?s property. The partners haveprepared the following balance sheet:Cash.......................................... $ 30,000Liabilities....................................... 22,000Haynes, loan.................................... 10,000Simon, capital (40%).............................. 16,000Haynes, capital (20%)............................. (6,000)Jackson, capital (40%)............................ (12,000)Cash................. $ 20,000 Liabilities................... $ 40,000Hough, loan............ 8,000 Luck, loan.................. 10,000Noncash assets.......... 162,000 Hough, capital (50%)......... 90,000Luck, capital (40%)........... 30,000Cummings, capital (10%)...... 20,000Total assets........... $190,000 Total liabilities and capital.... $190,000The firm sells the noncash assets for $80,000, it will use $21,000 of this amount to pay liquidationexpenses. All three of these partners are personally insolvent.Part CUse the same information as in Part B, but assume that the profits and losses are split 2:4:4 toHough, Luck, and Cummings, respectively, and that liquidation expenses are only $6,000.Part DFollowing the liquidation of all noncash assets, the partnership of Redmond, Ledbetter, Watson, andSandridge has the following account balances:Liabilities....................................... $ 28,000Redmond, loan.................................. 5,000Redmond, capital (20%)........................... (21,000)Ledbetter, capital (10%)........................... (30,000)Watson, capital (30%)............................. 3,000Sandridge, capital (40%)........................... 15,000Redmond is personally insolvent.

 

Paper#44274 | Written in 18-Jul-2015

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