HU The Unlimited Liability in The Partnership and Deficit Balance Question

Description

Understanding the issues questions 13-1,13-4,14-3 &14-4, Exercise 13-4, Exercise14-7 & Problem 14-9.

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ASSIGNMENT INSTRUCTIONS
Your week two assignment includes four questions which you will find in the following tabs.
Before you begin working on the assignment, I suggest that you create a folder for all of your
Advance Accounting 2 assignments in the Documents folder. You might want to name this folder “AC 426 folder.”
After you open this file, please save the entire file to your AC 426 folder.
IF YOU OPEN THE FILE AND BEGIN WORKING WITHOUT SAVING YOU WILL
LOSE YOUR WORK! Excel files are embedded web pages and your work will be lost if
you do not SAVE the file first!
Be sure to submit the entire file in the assignment upload area! Please do not try to save
and send the tabs separately!
Understanding the Issues Questions
Please answer the following questions
13-1.
A major issue faced by people who are starting their own business is the form of
organization they should select. What are some major characteristics of a partnership
that might influence their decision?
13-4. Generally speaking, what events or activities would normally result in a partner’s
capital account being debited?
14- 3. The liquidation of a partnership can be a complex and time- consuming process.
What basic guidelines should be followed in order to ensure that the process is
proper?
14-4.
In the liquidation of a partnership, why might a partner be concerned that a fellow
partner has a deficit net capital balance, and how might such a deficit be eliminated?
EXERCISE 13-4
1
2
3
4
5
6
Exercise 14-7
Cash
Noncash
Assets
Adams
Boyd
Liabilities
Partner’s Loan
and Capital Balance
Adams
Boyd
Chambers
Beginning
balance
Sales of Assets
Balances
Pay liabilities
Distributions
Balances
Schedule of Safe Payments
Chambers
Totals
Profit and Loss
percentages
Combined
capital and loan
balances
Estimated
liquidation
expenses
and/or
adjustment of
minimum cash
balance
Balances
Maximum loss
possible
Balances
Allocation of
debit capital
balances
Safe payment
2
Cash
Noncash
Assets
Liabilities
Partner’s Loan
and Capital Balance
Adams
Boyd
Chambers
Beginning balances
Sales of assets
Balances
3
Partner’s Loan
Cash
Noncash
Assets
Liabilities
and Capital Balance
Adams
Boyd
Chambers
Liabilities
Partner’s Loan
and Capital Balance
Adams
Boyd
Chambers
Beginning balances
Sales of assets
Balances
Payment of liabilities
Contribution of capital
Payment of liabilities
Allocation of Boyd balance
Balance
4
Cash
Beginning balances
Sales of assets
Balances
Noncash
Assets
PROBLEM 14-9
cash
20X5
Profit and loss percentages
Beg. Balances
June 30 sale of assets
balances
contribution of assets
payment of liabilities
balances
July 28 sale of assets
balances
contribution of assets
payment of liabilities
balances
adams contribution
payment of liabilities
balances
allocation of beyer deficit (3:4)
balances
allocation of chenery deficit
balances
other assets
liabilities
Allocation of Adams’ personal assets:
Personal liabilities
Unsatisfied partnership creditors
Total claims against personal assets
60%
40%
$37.500
100%
Assets to be contributed to partnership (40% × $30,000)
Allocation of Chenery’s personal assets:
Personal liabilities
Unsatisfied partnership creditors
Total claims against personal assets
$30.000
12.000
Assets to be contributed to partnership (10% × $30,000)
3.000
(Note: The $30,000 of
assets is $49,000 less the
$19,000
previously
contributed
to
the
partnership.)
90%
10%
100%
Capital Balances
Adams
30%
Beyer
30%
Chenery
40%

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