On December 1, 2022, partners Silverstone, Spa and Suzuka decided to liquidate their partnership. Prior to...
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On December 1, 2022, partners Silverstone, Spa and Suzuka decided to liquidate their partnership. Prior to liquidation, the partners had cash fo $15,000, non-cash assets of $145,000, liabilities to outsiders of $35,000 and a note payable to partner Suzuka of $16,000. The capital balances of the partners were: Silverstone - $36,000; Spa - $56,000; Suzuka - $17,000. The partners share profits and losses in the ratio of 3:3:4, respectively. During December 2022, the partnership received cash of $30,000 from the sale of assets with a book value of $38,000 and paid $3,600 of liquidation expenses. During January 2023, the partnership realized $44,000 from the sale of assets with a book value of $35,000 and paid liquidation expenses of $8,400. During February 2023, the remaining assets were sold for $45,000. The partners agreed to distribute cash at the end of each month, provided a Php5,000 cash is maintained for other expenses, until the final distribution to partners. Required: • Prepare a cash priority program. • Prepare a statement of liquidation. ● Prepare the necessary journal entries to record the liquidation process. On December 1, 2022, partners Silverstone, Spa and Suzuka decided to liquidate their partnership. Prior to liquidation, the partners had cash fo $15,000, non-cash assets of $145,000, liabilities to outsiders of $35,000 and a note payable to partner Suzuka of $16,000. The capital balances of the partners were: Silverstone - $36,000; Spa - $56,000; Suzuka - $17,000. The partners share profits and losses in the ratio of 3:3:4, respectively. During December 2022, the partnership received cash of $30,000 from the sale of assets with a book value of $38,000 and paid $3,600 of liquidation expenses. During January 2023, the partnership realized $44,000 from the sale of assets with a book value of $35,000 and paid liquidation expenses of $8,400. During February 2023, the remaining assets were sold for $45,000. The partners agreed to distribute cash at the end of each month, provided a Php5,000 cash is maintained for other expenses, until the final distribution to partners. Required: • Prepare a cash priority program. • Prepare a statement of liquidation. ● Prepare the necessary journal entries to record the liquidation process.
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SOLUTION Cash Priority Program A cash priority program outlines the order in which cash is distributed during the liquidation process Based on the inf... View the full answer
Related Book For
Accounting Principles Volume 2
ISBN: 9781119786634
9th Canadian Edition
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak
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