On its schedule of liquidation, what is the cash balance on Feb 28? Question 19
ID: 2436630 • Letter: O
Question
On its schedule of liquidation, what is the cash balance on Feb 28?
Question 19 options:
$230,600
$80,600
$90,000
$150,000
show work
$230,600
$80,600
$90,000
$150,000
show work
The partnership of Wingler, Noris Rodgers, and Guthrie was formed several years ago as a architectural firm. Several partnersrecently had personal financial problems and decided to terminate operations and liquidate the business The following balance sheet ?mmarizec its financial information on January 5 at the beginning of thisprocess: Cash Accounts Receivable InventorY Land Building and Equipment (net! Total Assets $15,000 82,000 101,000 85,000 168 000 451,000 Liabilities Rodgers, Loan Wingler, Capital Norris, Capital Rodgers Capital Gu thrie, Capital Total Liabilties and Capital $74,000 35,000 120,000 88,000 74,000 51,000 The estimated liquidation expenses were Profit and loss allocation ratio according to the provisions of partnership agreement: 16,000 Wingler Norris Rodgers Guthrie 30% 10% 20% 40% The following transactions occurred during the liquidation Jan. 14 Collected 80% of the total accounts receivalbe with the rest judged to be uncollectible Feb. 23 Sold the land, building and equipment for Mar. 11 Made safe capital distributions Mar.29 Learned that Guthrie became personally in solvent Apr, 3 Paid al liabilities Jun. 30 Sold al ventory for Jul 13 Made safe capital distributions again Sep, 26 Paid liquidation expenses Nov, 4 Made final cash distrubtions to the partners based on the assimption thatall partners except Guthi are personally solvent. 80% 150,000 71,000 11,000Explanation / Answer
In the given problem we are required to compute the Cash balance of the partnership firm as on 28 Feb. Since in the given problem there are various transactions which have taken place at different dates throughout the year, therefore we will take into consideration only those Cash transactions which have taken place till 28 Feb, So only two transactions are relevant for computation of cash Balance as on 28 Feb, the first transaction Is of Jan 14, & the other transaction of Feb 23. These transactions consist of Collection of Accounts receivable & Realisation of Land/building & equipment ,hence these transactions will generate cash & increase our cash balance.
Now let's compute the Cash balance.
A) Opening balance of Cash (as given) = $15000
B) Jan 14: Add: Collection from Accounts receivable (wn1) = $65600
C)Feb 23: Add: Realisation from Land,Building, equipment= $150000
D) 28 Feb : Cash Balance as on 28 Feb (A+B+C)= $230600
Wn1 : Collection from Accounts Receivable =(80% of 82000)
= $65600
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