Use the following information for questions 1 and 2.
On June 30, 2015, the Warle, Xin, and Yates partnership had the following fiscal year-end balance sheet:
Cash $ 4,000 Accounts payable $ 7,000
Accounts receivable 6,000 Loan from Xin 5,000
Inventory 14,000 Warle, capital (20%) 14,000
Plant assets-net 12,000 Xin, capital (30%) 10,000
Loan to Warle 6,000 Yates, capital (50%) 6,000
Total assets $ 42,000 Total liab./equity $ 42,000
The percentages shown are the residual profit and loss sharing ratios. The partners dissolved the partnership on July 1, 2015, and began the liquidation process. During July the following events occurred:
* Receivables of $3,000 were collected.
* The inventory was sold for $4,000.
* All available cash was distributed on July 31, except for $2,000 that was set aside for contingent expenses.
1. The book value of the partnership equity (i.e., total equity of the partners) on June 30, 2015 is (3 points):
2. The cash available for distribution to the partners on July 31, 2015 is (2 points):
3. Prepare a Schedule of Safe Payments (4 points). How much cash Xin will receive from the cash that is available for distribution on July 31
Quan, Ray, Sen, and Tad are partners who share profits and losses 30%, 20%, 35%, and 15%, respectively. The partnership will be liquidated gradually over several months beginning January 1, 2015. The partnership trial balance at December 31, 2014 is as follows:
DEBITS CREDITS
Cash $ 3,000 Accounts Payable $12,000
Accounts receivable 10,000 Note payable 30,000
Inventory 25,000 Loan from Sen 6,000
Loan to Ray 4,000 Quan, capital (30%) 12,000
Furniture 15,000 Ray, capital (20%) 9,000
Equipment 18,000 Sen capital (35%) 12,000
Goodwill 10,000 Tad, capital (15%) 4,000
Totals $85,000 Totals $85,000
Required:
1. Compute partners' vulnerability ranking (3 points).
2. Prepare a Schedule of Assumed Loss Absorption (4 points).
3. Prepare a Schedule of Cash Distribution (3 points).