1 / 7

Chapter 13

Chapter 13. Liquidation of the Partnership. LIQUIDATION OF A PARTNERSHIP. The liquidation of a partnership terminates the business. To liquidate a partnership, follow these steps: 1. Sell noncash assets for cash and recognize any gain or loss on realization.

lemuel
Download Presentation

Chapter 13

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Chapter 13 Liquidation of the Partnership

  2. LIQUIDATION OF A PARTNERSHIP • The liquidation of a partnership terminates the business. • To liquidate a partnership, follow these steps: 1. Sell noncash assets for cash and recognize any gain or loss on realization. 2. Allocate any gain or loss on realization to the partners based on their income ratios. 3. Pay partnership liabilities in cash. 4. Distribute remaining cash to partners based on their capital balances.

  3. LIQUIDATION OF PARTNERSHIP • No capital deficiency • Capital deficiency • Partner with deficiency pays partnership • Partners with credit capital balances absorb deficiency in income sharing proportion

  4. Example

  5. Answer

  6. Capital Deficiency Example Cash: $5,000 A/R: $15,000 Inventory: $18,000 Equipment: $35,000 A/C Equipment: $8,000 Notes Payable: $15,000 A/P: $16,000 R. Aube, Capital: $15,000 P.Chordia, Capital : $17,800 W. Elliot, Capital: $1,200 • The assets of Aube, Chordia and Elliot will be sold for $42,000

  7. Answer

More Related