After closing the accounts on July 1, prior to liquidating the partnership, the capital account balances...

Question

After closing the accounts on July 1, prior to liquidating the partnership, the capital account balances of Gold, Porter, and Sims are $30,000, $42,900, and $18,900, respectively. Cash, noncash assets, and liabilities total $49,200, $79,200, and $36,600, respectively. Between July 1 and July 29, the noncash assets are sold for $63,600, the liabilities are paid, and the remaining cash is distributed to the partners. The partners share net income and loss in the ratio of 3:2:1.

Prepare a statement of partnership liquidation for the period July 1-29. Enter any subtractions (balance deficiencies, payments, cash distributions, divisions of loss, sale of assets) as negative numbers using a minus sign. If an amount is zero, enter in "0".

Gold, Porter, and Sims
Statement of Partnership Liquidation
For the Period Ending July 1-29
	Cash +	Noncash Assets =	Liabilities +	Capital Gold (3/6) +	Capital Porter (2/6) +	Capital Sims (1/6)
Balances before realization	$	$	$	$	$	$
Sale of assets and division of loss	+
Balances after realization	$	$	$	$	$	$
Payment of liabilities
Balances after payment of liabilities	$	$	$	$	$	$
Cash distributed to partners
Final balances	$	$	$	$	$	$

Statement of LLC Liquidation

Lester, Torres, and Hearst are members of Arcadia Sales, LLC, sharing income and losses in the ratio of 2:2:1, respectively. The members decide to liquidate the limited liability company. The members' equity prior to liquidation and asset realization on August 1 are as follows:

Lester	$27,200
Torres	63,000
Hearst	39,100
Total	$129,300

In winding up operations during the month of August, noncash assets with a book value of $170,200 are sold for $211,000, and liabilities of $56,700 are satisfied. Prior to realization, Arcadia Sales has a cash balance of $15,800.

a. Prepare a statement of LLC liquidation. Enter any subtractions (balance deficiencies, payments, cash distributions, divisions of loss, sale of assets) as negative numbers using a minus sign. If an amount is zero, enter "0".

Arcadia Sales, LLC
Statement of LLC Liquidation
For the Period August 1-31
	Cash +	Noncash Assets =	Liabilities +	Member Equity Lester (2/5) +	Member Equity Torres (2/5) +	Member Equity Hearst (1/5)
Balances before realization	$	$	$	$	$	$
Sale of assets and division of gain	+			+	+	+
Balances after realization	$	$	$	$	$	$
Payment of liabilities
Balances after payment of liabilities	$	$	$	$	$	$
Distribution of cash to members
Final balances	$	$	$	$	$	$

b. Provide the journal entry for the final cash distribution to members. For a compound transaction, if an amount box does not require an entry, leave it blank.

c. What is the role of the income- and loss-sharing ratio in liquidating a LLC?

The income- and loss-sharing ratio is only used to ___ on the realization of asset sales. It ___ used for the final distribution.

 · Answer

1                Statement of Partnership Liquidation                For the Period July 1-29                  Cash  Noncash Assets  Liabilities  Gold (3/6)  Porter (2/6)  Sims (1/6)    Balances before realization  49200  79200  36600  30000  42900  18900    Sale of assets and division of loss  63600  -79200  0  -7800  -5200  -2600    Balances after realization  112800  0  36600  22200  37700  16300    Payment of liabilities  -36600  0  -36600  0  0  0    Balances after payment of liabilities  76200  0  0  22200  37700  16300    Cash distributed to partners  -76200  0  0  -22200  -37700  -16300    Final balances  0  0  0  0  0  0        2                a                Statement of LLC Liquidation                For the Period August 1-31                  Cash  Noncash Assets  Liabilities  Lester (2/5)  Torres(2/5)  Hearst(1/5)    Balances before realization  15800  170200  56700  27200  63000  39100    Sale of assets and division of gain  211000  -170200  0  16320  16320  8160    Balances after realization  226800  0  56700  43520  79320  47260    Payment of liabilities  -56700  0  -56700  0  0  0    Balances after payment of liabilities  170100  0  0  43520  79320  47260    Distribution of cash to members  -170100  0  0  -43520  -79320  -47260    Final balances  0  0  0  0  0  0                    b               Lester, Member Equity  43520             Torres, Member Equity  79320             Hearst, Member Equity  47260                     Cash    170100                           c                The income- and loss-sharing ratio is only used to distribute the gain or loss on the realization of asset sales. It is not used for the final distribution.   .

After closing the accounts on July 1, prior to liquidating the partnership, the capital account balances...

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1
Statement of Partnership Liquidation
For the Period July 1-29
	Cash	Noncash Assets	Liabilities	Gold (3/6)	Porter (2/6)	Sims (1/6)
Balances before realization	49200	79200	36600	30000	42900	18900
Sale of assets and division of loss	63600	-79200	0	-7800	-5200	-2600
Balances after realization	112800	0	36600	22200	37700	16300
Payment of liabilities	-36600	0	-36600	0	0	0
Balances after payment of liabilities	76200	0	0	22200	37700	16300
Cash distributed to partners	-76200	0	0	-22200	-37700	-16300
Final balances	0	0	0	0	0	0

2
a
Statement of LLC Liquidation
For the Period August 1-31
	Cash	Noncash Assets	Liabilities	Lester (2/5)	Torres(2/5)	Hearst(1/5)
Balances before realization	15800	170200	56700	27200	63000	39100
Sale of assets and division of gain	211000	-170200	0	16320	16320	8160
Balances after realization	226800	0	56700	43520	79320	47260
Payment of liabilities	-56700	0	-56700	0	0	0
Balances after payment of liabilities	170100	0	0	43520	79320	47260
Distribution of cash to members	-170100	0	0	-43520	-79320	-47260
Final balances	0	0	0	0	0	0

b
Lester, Member Equity	43520
Torres, Member Equity	79320
Hearst, Member Equity	47260
Cash		170100

c
The income- and loss-sharing ratio is only used to distribute the gain or loss on the realization of asset sales. It is not used for the final distribution.