Jenny, Daniel, and Mason have the following capital balances: $30,000, $50,000 and $46,000respectively. The partners share profits and losses 30%, 30%, and 40% respectively. Consider the
following five independent transactions:
a. Daniel retires and is paid $75,200 based on the terms of the original partnership agreement. If the
bonus method is used, what is the capital balance of Jenny after the transaction?
Answer:
b. Daniel retires and is paid $68,000 based on an independent appraisal of the business. If the
goodwill method is used, what is the capital balance of Jenny after the transaction?
Answer:
c. The three partners agree to admit Lisa for a 20% interest. Lisa contributes $38,000 to the partnership. If
the bonus method is used, what is the capital balance of Jenny after the transaction?
Answer:
d. The three partners agree to admit Lisa for a 20% interest. Lisa contributes $23,000 to the partnership.
If the bonus method is used, what is the capital balance of Jenny after the transaction?
Answer:
e. The three partners agree to admit Lisa for a 30% interest. Lisa contributes $38,000 to the
partnership. If the goodwill method is used, what is the goodwill being recorded?
Answer:
On March 1, 2022, the partners of Judy, Scott, and Nelson (who shared profits and losses in the ratio of
4:4:2, respectively) decided to liquidate their partnership. The balance sheet at this date was as follows:
Assets
Cash
Accounts Receivable
Inventory
Liabilities and capital balances
$141,600 Accounts payable
$114,400
78,700 Nelson, loan
39,000
210,000
Machinery and equipment, net
165,400 Judy, capital
248,500 Scott, capital
Scott, Loan
58,000 Nelson, capital
152,300
Total
176,500
$692,200
Total
$692,200
The partners planned a program of piecemeal conversion of the business assets to minimize liquidation
losses. All available cash, less an amount retained to provide for future expenses, was to be distributed to
the partners at the end of each month. A summary of liquidation transactions during March follows:
1. $54,300 was collected on the accounts receivable; the balance was deemed to be uncollectible.
2. $125,600 was received for the entire inventory.
3. $ 4,700 in liquidation expenses were paid.
4. $108,100 was paid to outside creditors, after receiving a $6,300 credit memo from a creditor.
5. Cash of $7,800 was retained at the end of the month to cover unrecorded liabilities and anticipated
expenses. The safe payment of cash was distributed to the partners.
Requirements:
(1) Calculate the actual loss for March and potential liquidation loss.
(2) Calculate the safe payments to be made to the partners at the end of March. Round your final answers
to the nearest dollar when needed.
ACTG 324 Homework assignment 5: Safe installment payment
Name:
(1) Calculate the actual loss for March and potential liquidation loss.
1
Answer: Actual loss:
; Potential loss:
(2) Calculate the safe payments to be made to the partners at the end of March.
Answer: Judy:
Scott:
Nelson:
2
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