Business Finance
FIU Advanced Accounting for A Masters Program Inventory

Florida International University

Question Description

I’m trying to study for my Accounting course and I need some help to understand this question.

Hi, this is Advanced accounting for a Masters program. I need to complete 7.1 and 7.3 only, please notice I worked with a tutor with this and he couldn't get answers correct.

Unformatted Attachment Preview

Advanced Accounting Case 7 Fall 2020 Names Points: Case 7.1 – 15 points Case 7.2 – 30 points Case 7.3 – 15 points Total (60 points) Case 7.1 Joe, Jim, and Jay have been partners for several years. The partners allocate all profits and losses on a 4:4:2 basis, respectively. Now, each partner has become personally insolvent and, the three partners have decided to liquidate the business in hopes of solving their personal financial issues. As of September 1, the partnership’s balance sheet is as follows: Assets Liabilities and Capital Cash $ 35,000 Liabilities $ 131,000 Accounts receivable 132,000 Joe, capital 60,000 Inventory 122,000 Jim, capital 99,000 Land, building, and equipment (net) 71,000 Jay, capital 70,000 Total assets $ 360,000 Total liabilities and capital $ 360,000 Required: Prepare journal entries for the following transactions (if no entry is required for a transaction/ event, indicate "No journal entry required"): 1. Sold all inventory for $80,000 cash (1 point). 2. Paid $14,700 in liquidation expenses (1 point). 3. Paid $64,000 of the partnership’s liabilities (1 point). 4. Collected $84,000 of the accounts receivable (1 point). 5. Distributed safe cash balances; the partners anticipate no further liquidation expenses (5 points). 6. Sold remaining accounts receivable for 35 percent of face value (2 points). 7. Sold land, building, and equipment for $41,000 (1 point). 8. Paid all remaining liabilities of the partnership (1 point). 9. Distributed cash held by the business to the partners (2 points). Case 7.2 On January 1, the partners Mary, Helen, and Jane (who share profits and losses in the ratio of 5:3:2, respectively) decide to liquidate their partnership. The trial balance at this date is as follows: Cash Accounts receivable Inventory Machinery and equipment, net Mary, loan Accounts payable Helen, loan Mary, capital Helen, capital Jane, capital Totals $ Debit 25,000 80,000 66,000 203,000 44,000 Credit $ $ 418,000 $ 81,000 34,000 125,000 97,000 81,000 418,000 The partners plan a program of piecemeal conversion of the partnership’s assets to minimize liquidation losses. All available cash, less an amount retained to provide for future expenses, is to be distributed to the partners at the end of each month. A summary of the liquidation transactions follows: January Collected $58,000 of the accounts receivable; the balance is deemed uncollectible. Received $45,000 for the entire inventory. Paid $9,000 in liquidation expenses. Paid $72,000 to the outside creditors after offsetting a $9,000 credit memorandum received by the partnership on January 11. Retained $17,000 cash in the business at the end of January to cover any unrecorded liabilities and anticipated expenses. The remainder is distributed to the partners. February Paid $10,000 in liquidation expenses. Retained $5,000 cash in the business at the end of the month to cover unrecorded liabilities and anticipated expenses. March Received $153,000 on the sale of all machinery and equipment. Paid $12,000 in final liquidation expenses. Retained no cash in the business. Required: Prepare a schedule to compute the safe installment payments made to the partners at the end of each of these three months. (30 points) Case 7.3 The partnership of Susan, Tim, James, and Michelle was formed several years ago as a law firm. Several partners have undergone personal financial problems and have decided to terminate operations and liquidate the business. The following balance sheet is drawn up as a guideline for this process: Assets Cash Accounts receivable Inventory Land Building and equipment (net) Total assets $ 33,000 100,000 119,000 94,000 177,000 $ 523,000 Liabilities and Capital Liabilities James, loan Susan, capital (30%) Tim, capital (10%) James, capital (20%) Michelle, capital (40%) Total liabilities and capital $ 70,000 53,000 147,000 106,000 83,000 64,000 $ 523,000 When the liquidation commenced, liquidation expenses of $15,000 were anticipated as being necessary to dispose of all property. Required: Prepare a pre-distribution plan for this partnership (15 points). ...
Purchase answer to see full attachment
Student has agreed that all tutoring, explanations, and answers provided by the tutor will be used to help in the learning process and in accordance with Studypool's honor code & terms of service.

Final Answer

Attached.

Student name
Institution affiliation
Course title

1) Sold all inventory for $80,000 cash
Initial price of inventory
Selling price of inventory
Loss incurred in sale

Cash
Joe capital
Jim capital
Jay capital
Inventory

$122,000
$80,000
42000

Debit $
80,000
16,800
16,800
8,400

2) Paid $14,700 in liquidation expenses

Joe, capital
Jim, capital
Jay, capital
Cash

Debit $
Credi $
5,880
5,880
2,940
14,700

To record liquidation expense among the three partners in the ration of (4:4:2)
Joe liquidition expense 0.4 x14700
Jim liquidation expense 0.4 x14700
Jay liquidation expense 0.2 x14700
3)Paid $64,000 of the partnership’s liabilities

Liabilities

Dr $
Cr $
64,000

cash

64,000

4)Collected $84,000 of the accounts receivable

cash
Account receivables

Dr $
Cr $
84,000
84, 000

5) Distributed safe cash balances; the partners anticipate no further liquidation expenses

Entries
per value
Capital balances
Accounts receivables $132,000
land,building & equi Liquidation expense
Inventory
$122,000
Remaining balances
Deficit split
Safe cash balances

S.P

loss

ration

$84,000

$48,000 4;4;2
$71, 000
14,700
$80,000
$42,000
4;2

Joe
$60,000
($19...

CarterT (3812)
University of Virginia

Anonymous
The tutor was pretty knowledgeable, efficient and polite. Great service!

Anonymous
Heard about Studypool for a while and finally tried it. Glad I did caus this was really helpful.

Anonymous
Just what I needed… fantastic!

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Brown University





1271 Tutors

California Institute of Technology




2131 Tutors

Carnegie Mellon University




982 Tutors

Columbia University





1256 Tutors

Dartmouth University





2113 Tutors

Emory University





2279 Tutors

Harvard University





599 Tutors

Massachusetts Institute of Technology



2319 Tutors

New York University





1645 Tutors

Notre Dam University





1911 Tutors

Oklahoma University





2122 Tutors

Pennsylvania State University





932 Tutors

Princeton University





1211 Tutors

Stanford University





983 Tutors

University of California





1282 Tutors

Oxford University





123 Tutors

Yale University





2325 Tutors