DISSOLUTION & LIQUIDATION

5. Peter, Roberts, and Dana have the following capital balances; $80,000, $100,000 and $60,000
1. This is based on the following balance sheet for the partnership of Alt, Barr, and Colt: respectively. The partners share profits and losses 20%, 40%, and 40% respectively. Roberts retires
Cash $ 210,000 Liabilities $ 510,000 and is paid $160,000 based on the terms of the original partnership agreement. If the bonus method is
Other assets 1,500,000 Alt, Capital (40%) 300,000 used, what is the capital balance of Peter?
Barr, Capital (40%) 480,000 A) $20,000. D) $120,000.
. Colt, Capital (20%) 420,000 B) $60,000. E) $230,000.
$1,710,000 $1,710,000 C) $110,000.
Figures shown parenthetically reflect agreed profit and loss sharing percentages.
If the assets are fairly valued on the above balance sheet and the partnership wishes to admit Dall as a 6. Max, Jones and Waters shared profits and losses 20%, 40%, and 40% respectively and their partnership
new 1/5 partner without recording goodwill or bonus, Dall should invest cash or other assets of capital balance is $10,000, $30,000 and $50,000 respectively. Max has decided to withdraw from the
a. $427,500. c. $300,000 partnership. An appraisal of the business and its property estimates the fair value to be $ 200,000. Land
b. $240,000 d. $342,000 with a book value of $30,000 has a fair value of $45,000. Max has agreed to receive $20,000 in
exchange for her partnership interest. What amount should land be recorded on the partnership books?
2. The partnership of Amos, Bell, and Cole has the following balance sheet for A) $20,000. D) $50,000.
Cash $ 140,000 Liabilities $ 340,000 B) $30,000. E) $200,000.
Other assets 1,000,000 Amos, Capital (40%) 200,000 C) $45,000
Bell, Capital (40%) 320,000
. Cole, Capital (20%) 280,000 7. The Abrams, Bartle, and Creighton partnership began the process of liquidation with the following
$1,140,000 $1,140,000 balance sheet:
Figures shown parenthetically reflect agreed profit and loss sharing percentages. Cash $ 16,000 Liabilities $150,000
If the assets are fairly valued on the above balance sheet and the partnership wishes to admit Dell as a Noncash assets 434,000 Abrams,capital 80,000
new 1/5 partner without recording bonus, Dell should invest cash or other assets of Bartle, capital 90,000
a. $285,000. c. $200,000. . Creighton, capital 130,000
b. $160,000. d. $228,000. Total $450,000 Total $450,000
Abrams, Bartle, and Creighton share profits and losses in a ratio of 3:2:5. Liquidation expenses are
3. Assume the existing capital of a partnership is $100,000. Two partners currently own the partnership expected to be $12,000.
and split profits 40/60. A new partner is to be admitted and will contribute net assets with a fair value of After the liquidation expenses of $12,000 had been paid and the noncash assets sold, Creighton had a
$50,000. An appraisal of existing partnership assets indicates accounts receivable overstated by deficit of $8,000. For what amount were the noncash assets sold?
$10,000, inventory overstated by $12,000 and land understated by $25,000. What is the total capital of A) $170,000. D) $146,000.
the new partnership if the bonus method is being used? B) $264,000. E) $185,000.
a. $153,000 c. $175,000
b. $128,000 d. $150,000 8. The Keaton, Lewis, and Meador partnership had the following balance sheet just before entering
liquidation:
4. In the RST partnership, Ron's capital is $80,000, Stella's is $75,000, and Tiffany's is $50,000. They Cash $ 10,000 Liabilities $130,000
share income in a 3:2:1 ratio, respectively. Tiffany is retiring from the partnership. Tiffany is paid Noncash assets 300,000 Keaton,capital 60,000
$60,000, and no goodwill is recorded. What is the Ron's capital balance after Tiffany withdraws from the Lewis, capital 40,000
partnership? . Meador, capital 80,000
A. $74,000 C. $75,000 Total $310,000 Total $310,000
B. $71,000 D. $86,000 Keaton, Lewis, and Meador share profits and losses in a ratio of 2:4:4. Noncash assets were sold for

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 $180,000. Liquidation expenses were $10,000. purchased 3,000 shares of treasury stock at $13 per share, and sold 3,000 shares of treasury stock at
Assume that Lewis was personally insolvent and could not contribute any assets to the partnership, $14 per share. What is the amount of additional paid-in capital at December 31, 2008?
while Keaton and Meador were both solvent. What amount of cash would Keaton have received from
the distribution of partnership assets? a. $0 c. $60,000
A) $38,000. D) $34,000. b. $3,000 d. $63,000
B) $30,000. E) $31,600.
C) $24,000.
12. Poodle Corporation was organized on January 3, 2011. The firm was authorized to issue 100,000 shares
of $5 par common stock. During 2011, Poodle had the following transactions relating to shareholders'
9. The Henry, Isaac, and Jacobs partnership was about to enter liquidation with the following account equity:
balances:  Issued 30,000 shares of common stock at $7 per share.
Cash $ 90,000 Liabilities $ 60,000  Issued 20,000 shares of common stock at $8 per share.
Noncash assets 300,000 Henry, capital 80,000  Reported a net income of $100,000.
Isaac, capital 110,000  Paid dividends of $50,000.
. Jacobs, capital 140,000 What is total Paid-in capital at the end of 2011?
Total $ 390,000 Total $390,000 A. $420,000. C. $470,000.
Estimated expenses of liquidation were $5,000. Henry, Isaac, and Jacobs shared profits and losses in a B. $370,000. D. $320,000.
ratio of 2:4:4.
What amount of cash was available for safe payments, based on the above information? (E) 13. Nelsen Co. was organized on January 2, 2001, with 100,000 authorized shares of $10 par value
A) $30,000. D) $35,000. common stock. During 2001 Nelsen had the following capital transactions:
B) $85,000. E) $40,000.  January 5 – issued 75,000 shares at $14 per share.
C) $25,000.  July 27 – purchased 5,000 shares at $11 per share.
 November 25 – sold 4,000 shares of treasury stock at $13 per share.
Nelsen used the cost method to record the purchase of the treasury shares. What would be the balance
10. Hara, Ives, and Jack are in the process of liquidating their partnership. Since it may take several months in the Paid-in Capital from Treasury Stock account at December 31, 2001?
to convert the other assets into cash, the partners agree to distribute all available cash immediately, a. $0. c. $8,000.
except for $10,000 that is set aside for contingent expenses. The balance sheet and residual profit and b. $4,000. d. $12,000.
loss sharing percentages are as follows:
Cash $400,000 Accounts payable $200,000 14. The stockholders' equity of Bello Company at July 31, 2001 is presented below:
Other assets 200,000 Hara, capital (40%) 135,000 Common stock, par value $20, authorized 400,000 shares; issued and
Ives, capital (30%) 216,000 outstanding 200,000 shares $4,000,000
Jack, capital (30%) 49,000 Paid-in capital in excess of par 160,000
Total assets $600,000 Total liab./equity $600,000 Retained earnings 650,000
How much cash should Ives receive in the first distribution?
$4,810,000
a. $146,000. c. $153,000.
b. $147,000. d. $156,000 On August 1, 2001, the board of directors of Bello declared a 15% stock dividend on common stock, to
be distributed on September 15th. The market price of Bello's common stock was $35 on August 1,
2001, and $38 on September 15, 2001. What is the amount of the debit to retained earnings as a result
11. Roberson Corporation was organized on January 1, 2008, with authorized capital of 750,000 shares of the declaration and distribution of this stock dividend?
a. $600,000. c. $1,140,000.
of $10 par value common stock. During 2008, Roberson issued 30,000 shares at $12 per share,

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 b. $1,050,000. d. $750,000.

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