EXERCISE ADVANCE ACCOUNTING

1.

Cash and current assets $20,000 Liabilities $20,000

Land 160,000 Antam, capital 20,000
Building and equipment (net) 80,000 Blackberry, capital 40,000
Compas, capital 80,000
Delloit, capital 120,000
Totals $260,000 Totals $260.000

Require:
a. Ernest Co. is going to invest their money for the partnership, the purpose is to receive a 30 %
interest. No goodwill or bonus is to be recorded. How much should E invest?
b. Ernest Co. contributes $40,000 in cash in order to receive a 20% interest in the partnership.
Goodwill is to be recorded. Profits and losses have previously been split as follows:
A: 30%
B: 10%
C: 40%
D: 20%. After Ernest Co. makes their investment, what are the individual capital balances?
c. Ernest Co. also contributes $50,000 in cash in order to receive a 25% interest in the partnership.
Goodwill is to be recorded. After Ernest Co. makes their investment, what are the individual
capital balances?

LIQUIDATION
2. The following condensed balance sheet is for the partnership of Hardware, Software, and Printer,
who are share profits and losses in the ratio of 4:3:3, respectively below:
Cash . . . . . . . . . . . . . . . $ 90,000 Accounts payable . . . . .. . . $ 210,000
Other assets . . . . . . . . . . . . . 820,000 Printer, loan . . . . . . . . . . . . . 40,000
Hardware, loan . . . . . . . . . . . 30,000 Hardware, capital . . . . . . . .300,000
Software, capital . . . . . . .. . 200,000
Printer, capital . . . . . . . . . . .   190,000

The partners decide to liquidate the partnership. Forty percent of the other assets are sold for
$200,000. Prepare a proposed schedule of liquidation at this point in time.
3. The following condensed balance sheet is for the partnership of Miller, Tyson, and
Watson, who share profits and losses in the ratio of 6:2:2, respectively:
Cash . . . . . . . . . . . . . . $ 50,000 Liabilities . . . . . . . . . . . . . . . $ 42,000
Other assets . . . . . . . . $150,000 Miller, capital . . . . . . . . . . . . 69,000
Tyson, capital . . . . . . . . . . . . 69,000
Watson, capital . . . . . . . . . . . 20,000
Total assets . . . . . . . $ 200,000 Total liabilities and capital . . . . . . $ 200,000

For how much money must the other assets be sold so that each partner receives some
amount of cash in a liquidation?