On June 30, 2011, the Able, Baker, and Charlie partnership had the following fiscal year-end balance sheet:

The percentages shown are the residual profit and loss sharing ratios. The partners dissolved the partnership on July 1, 2011, and began the liquidation process. During July the following events occurred:

* Receivables of $6,000 were collected.

* All inventory was sold for $8,000.

* All available cash was distributed on July 31, except for

$4,000 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, 2011 is

A) $ 58,000.

B) $ 60,000.

C) $ 84,000.

D) $120,000.

2) The cash available for distribution to the partners on July 31, 2011 is

A) $ 4,000.

B) $ 8,000.

C) $14,000.

D) $22,000.

3. How much cash would Baker receive from the cash that is available for distribution on July 31? (Assume a safe payments schedule is used.)

A) $ 0

B) $ 800

C) $2,400

D) $4,000

Transcribed Image Text:

Cash Accounts receivable Inventory Plant assets-net Loan to Able Total assets $ 8,000 12,000 28,000 24,000 12,000 $ 84,000 Accounts payable Loan from Charlie Able, capital (20%) Baker, capital (20%) Charlie, capital (60%) Total liab./equity $ 14,000 10,000 28,000 20,000 12,000 $ 84,000 Cash Accounts receivable Inventory Plant assets-net Loan to Able Total assets $ 8,000 12,000 28,000 24,000 12,000 $ 84,000 Accounts payable Loan from Charlie Able, capital (20%) Baker, capital (20%) Charlie, capital (60%) Total liab./equity $ 14,000 10,000 28,000 20,000 12,000 $ 84,000

Answer rating: 100% (QA)

1 The book value of the partnership equity ie total equity of the partners on June 30 2011 28... View the full answer