Chapter 15 Homework Help Save & Exit Submit Saved my 7 The following balance she

Question

Chapter 15 Homework Help Save & Exit Submit Saved my 7 The following balance sheet is for a local partnership in which the partners have become very unhappy with each other. $ 40,000 Liabilities 10 points 130,0e0 Adams, capital Building Baker, capital Carvil, capital Dobbs, capital 30,000 eBook Total assets 290,000 Total liabilities and capital 5 290,000 To avoid more conflict, the partners have decided to cease operations and sell all assets. Using this information, answer the following 9 questions. Each question should be viewed as an independent situation related to the partnership's liquidation. a. The $10,000 cash that exceeds the partnership liabilities is to be disbursed immediately. If profits and losses are allocated to b. The $10,000 cash that exceeds the partnership liabilities is to be disbursed immediately. If profits and losses are allocated on a c. The building is immediately sold for $70,000 to give total cash of $110,000. The liabilities are then paid, leaving a cash balance of Adams, Baker, Carvil, and Dobbs on a 2:3:3:2 basis, respectively, how will the $10,000 be divided? 2:2:3:3 basis, respectively, how will the $10,000 be divided? $80,000. This cash is to be distributed to the partners. How much of this money will each partner receive if profits and losses are allocated to Adams, Baker, Carvil, and Dobbs on a 1:3:3:3 basis, respectively? (Do not round intermediate calculations.) d. Assume that profits and losses are allocated to Adams, Baker, Carvil, and Dobbs on a 1:3:4:2 basis, respectively. How much money must the firm receive from selling the land and building to ensure that Carvil receives a portion? (Do not round intermediate calculations.)

Explanation / Answer

Partnership a. If profits and losses are shared in the ratio 2:3:3:2 the $10000 of cash will be disbursed as under: 10000 Adam 2000 Baker 3000 Carvil 3000 Dobbs 2000 Total 10000 b. If profits and losses are shared in the ratio 2:2:3:3 the $10000 of cash will be disbursed as under: 10000 Adam 2000 Baker 2000 Carvil 3000 Dobbs 3000 Total 10000 c. Sale ptoceeds of building 70000 Cash balance 40000 Total cash available 110000 Profit sharing ratio: Adam 1 Baker 3 Carvil 3 Dobbs 3 10 Loss on sale of building 50000 Profit sharing ratio: Adam 1 5000 Baker 3 15000 Carvil 3 15000 Dobbs 3 15000 10 Distribution of cash after paying off liabilities 80000 Profit sharing ratio: Adam 1 8000 Baker 3 24000 Carvil 3 24000 Dobbs 3 24000 10 d. Profit sharing ratio: Adam 1 Baker 3 Carvil 4 Dobbs 2 10 Proceeds of sale of land and building if sold at book value Land 130000 Building 120000 250000 Balance of Carvil's Capital Account 60000 The land and building should be sold at $ 60000 0.4 24000 60000 to ensure that Carvil receives a portion

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