The partnership of Telliher, Bachra, and Lang has experienced operating losses for three consecutive years. The partners,

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The partnership of Telliher, Bachra, and Lang has experienced operating losses for three consecutive years. The partners, who have shared profits and losses in the ratio of Thea Telliher, 60 percent, Denis Bachra, 20 percent, and Alan Lang, 20 percent, are considering liquidating of the business. They ask you to analyze the effects of liquidation under various possibilities about the sale of the noncash assets. None of the partners have personal assets if they go into a deficit financial position. They present the following partnership balance sheet amounts at December 31, 2017:

The partnership of Telliher, Bachra, and Lang has experienced operating

Required
1. Prepare a summary of liquidation transactions for each of the following situations:
a. The noncash assets are sold for $36,300.
b. The noncash assets are sold for $27,600.
2. What legal recourse do the remaining partners have to be reimbursed for deficit balances?
3. Suppose, after allocating Telliher's deficit balance, Lang now has a deficit balance. How would the partnership deal with this deficiency?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Liquidation
Liquidation in finance and economics is the process of bringing a business to an end and distributing its assets to claimants. It is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations when they are due....
Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...
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Horngrens Accounting

ISBN: 978-0133855388

10th Canadian edition Volume 2

Authors: Tracie L. Miller Nobles, Brenda L. Mattison, Ella Mae Matsumura, Carol A. Meissner, Jo Ann L. Johnston, Peter R. Norwood

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