Accounting and Financial Management - BUSN9124
1. For the past 11 years, Elaine Wright has been an employee of the Star-Bright Electrical Supply...
For the past 11 years, Elaine Wright has been an employee of the Star-Bright Electrical Supply store. Elaine is a very diligent employee who rarely calls in sick and staggers her vacation days throughout the year so that no one else gets bogged down with her tasks for more than one day. Star-Bright is a small store that employs only four people other than the owner. The owner and one of the employees help customers with their electrical needs. One of the employees handles all receiving, stocking, and shipping of merchandise. Another employee handles the purchasing, payroll, general ledger, inventory, and AP functions. Elaine handles all of the point-of-sale cash receipts and prepares the daily deposits for the business. Furthermore, Elaine opens the mail and deposits all cash receipts (about 30 percent of the total daily cash receipts). Elaine also keeps the AR records and bills the customers who purchase on credit.
Required
Point out any control weaknesses you see in the scenario. List some recommendations to remedy any weaknesses you have found working under the constraint that no additional employees can be hired.
2. A re the so-called advantages of small business really advantages? Wouldn’t every small-business...
A re the so-called advantages of small business really advantages?
Wouldn’t every small-business owner like his or her business to grow into a large firm?
3. 11.In a partnership liquidation, the final cash distribution to the partners should be made in...
11.In a partnership liquidation, the final cash distribution to the partners should be made in accordance with the:
a.partners' profit and loss sharing ratio.
b.balances of the partners' capital accounts.
c.ratio of the capital contributions by the partners.
d.ratio of capital contributions less withdrawals by the partners.
12.In an advance plan for installment distributions of cash to partners of a liquidating partnership, each partner's loss absorption potential is computed by
a.dividing each partner's capital account balance by the percentage of that partner's capital account balance to total partners' capital.
b.multiplying each partner's capital account balance by the percentage of that partner's capital account balance to total partners' capital.
c.dividing the total of each partner's capital account less receivables from the partner plus payables to the partner by the partner's profit and loss percentage.
d.some other method.
13.Under the Uniform Partnership Act
a.partnership creditors have first claim (Rank I) against the assets of an insolvent partnership.
b.personal creditors of an individual partner have first claim (Rank I) against the personal assets of all partners.
c.partners with credit capital balances share (Rank I) the personal assets of an insolvent partner that has a debit capital balance with personal creditors of that partner.
d.personal creditors of the partners of an insolvent partnership share partnership assets on a pro rata basis (Rank I) with partnership creditors.
14.During the liquidation of the partnership of Karr, Rice, and Long. Karr accepts, in partial settlement of his interest, a machine with a cost to the partnership of $150,000, accumulated depreciation of $70,000, and a current fair value of $110,000. The partners share net income and loss equally. The net debit to Karr's account (including any gain or loss on disposal of the machine) is
a.$90,000.
b.$100,000.
c.$110,000.
d.$150,000.
15.X, Y, and Z have capital balances of $90,000, $60,000, and $30,000, respectively. Profits are allocated 35% to X, 35% to Y, and 30% to Z. The partners have decided to dissolve and liquidate the partnership. After paying all creditors, the amount available for distribution is $60,000. X, Y, and Z are all personally solvent. Under the circumstances, Z will
a.receive $18,000.
b.receive $30,000.
c.personally have to contribute an additional $6,000.
- personally have to contribute an additional $36,000.
16.The ABC partnership has the following capital accounts on its books at December 31, 2011:
Credit
A, Capital$400,000
B, Capital240,000
C, Capital80,000
All liabilities have been liquidated and the cash balance is zero. None of the partners have personal assets in excess of his personal liabilities. The partners share profits and losses in the ratio of 3:2:5. If the noncash assets are sold for $400,000, the partners should receive as a final payment:
a.A, $304,000;B, $176,000;C, $80,000
b.A, $256,000;B, $144,000;C, $-0-
c.A, $304,000;B, $176,000;C, $-0-
d.A, $120,000;B, $80,000;C, $200,000
17.The summarized balances of the accounts of MNO partnership on December 31, 2011, are as follows:
AssetsLiabilities and Capital
Cash$ 15,000Liabilities$ 15,000
Noncash 90,000M, Capital45,000
N, Capital30,000
O, Capital 15,000
Total Assets $105,000Total Equities$105,000
The agreed upon profit/loss ratio is 50:40:10, respectively. Using the information given above, which one of the following amounts, if any, is the loss absorption potential of partner N as of December 31, 2011?
a.$20,000
b.$35,000
c.$75,000
d.$120,000
18.Adamle, Boyer, and Clay are partners with a profit and loss ratio of 4:3:3. The partnership was liquidated and, prior to the liquidation process, the partnership balance sheet was as follows:
ADAMLE, BOYER, AND CLAY
Balance Sheet
January 1, 2011
AssetsLiabilities and Equity
Cash$ 60,000Adamle, Capital $216,000
Other assets540,000Boyer, Capital240,000
Clay, Capital 144,000
Total Assets$600,000Total Liabilities & Equities $600,000
After the partnership was liquidated and the cash was distributed, Boyer received $96,000 in cash in full settlement of his interest.
The liquidation loss must have been:
a.$360,000
b.$144,000
c.$504,000
d.$480,000
19.The partnership of Hall, Jones, and Otto has been dissolved and is in the process of liquidation. On July 1, 2011, just before the second cash distribution, the assets and equities of the partnership along with residual profit sharing ratios were as follows:
AssetsLiabilities & Equities
Cash$ 200,000Liabilities$ 150,000
Receivables-net50,000Hall, Capital 50%100,000
Inventories150,000Jones, Capital 30%175,000
Equipment-net 100,000Otto, Capital 20% 75,000
Total assets$ 500,000Total Lia & Equity 500,000
Assume that the available cash is distributed immediately, except for a $25,000 contingency fund that is withheld pending complete liquidation of the partnership. How much cash should be paid to each of the partners?
HallJonesOtto
a.$87,500$52,500$35,000
b.12,5007,50010,000
c.- 0 - 25,000- 0 -
d.- 0 - 15,00010,000
20.The partnership of Hall, Jones, and Otto has been dissolved and is in the process of liquidation. On July 1, 2011, just before the second cash distribution, the assets and equities of the partnership along with residual profit sharing ratios were as follows:
AssetsLiabilities & Equities
Cash$ 200,000Liabilities$ 150,000
Receivables-net50,000Hall, Capital 50%100,000
Inventories150,000Jones, Capital 30%175,000
Equipment-net 100,000Otto, Capital 20% 75,000
Total assets$ 500,000Total Lia & Equity 500,000
Assume that Hall takes equipment with a fair value of $40,000 and a book value of $50,000 in partial satisfaction of his equity in the partnership. If all the $200,000 cash is then distributed, the partners should receive:
HallJonesOtto
a.$100,000$60,000$40,000
b.25,00015,00010,000
c. - 0 45,0005,000
d. - 050,000 - 0
21.The partnership of Starr, Foley, and Pele share profits and losses in the ratio of 4:4:2, respectively. The partners voted to dissolve the partnership when its assets, liabilities, and capital were as follows:
AssetsLiabilities and Equity
Cash$150,000Liabilities$120,000
Other assets600,000Starr, Capital180,000
Foley, Capital210,000
Pele, Capital 240,000
Total assets$750,000Total Lia & Equity$750,000
The partnership will be liquidated over a prolonged period of time. As cash is available, it will be distributed to the partners. The first sale of noncash assets having a book value of $360,000 realized $285,000. How much cash should be distributed to each partner after this sale?
a.Starr, $54,000;Foley, $84,000;Pele, $177,000.
b.Starr, $174,000;Foley, $174,000;Pele, $87,000.
c.Starr, $126,000;Foley, $126,000;Pele, $63,000.
d.Starr, $90,000;Foley, $105,000;Pele, $120,000.
22.A, B, and C have capital balances of $90,000, $60,000, and $30,000, respectively. Profits are allocated 35% to A, 35% to B and 30% to C. The partners have decided to dissolve and liquidate the partnership. After paying all creditors the amount available for distribution is $60,000. A, B, and C are all personally solvent. Under the circumstances, C will
a.receive $18,000.
b.receive $30,000.
c.personally have to contribute an additional $6,000.
d.personally have to contribute an additional $36,000.
23.The ABC partnership has the following capital accounts on its books at December 31, 2011:
Credit
A, Capital$200,000
B, Capital120,000
C, Capital40,000
All liabilities have been liquidated and the cash balance is zero. None of the partners have personal assets in excess of his personal liabilities. The partners share profits and losses in the ratio of 3:2:5. If the noncash assets are sold for $150,000, the partners should receive as a final payment:
a.A, $152,000;B, $88,000C, $40,000
b.A, $128,000;B, $72,000;C, $ - 0 -
c.A, $152,000;B, $88,000;C, $ - 0 -
d.A, $60,000;B, $40,000;C, $100,000
24.The summarized balances of the accounts of RST partnership on December 31, 2011, are as follows:
AssetsLiabilities and Equity
Cash$ 30,000Liabilities$ 30,000
Noncash180,000R, Capital90,000
S, Capital60,000
T, Capital 30,000
Total Assets$210,000Total Lia & Equities$210,000
The agreed upon profit/loss ratio is 50:40:10, respectively. Using the information given above, which one of the following amounts, if any, is the loss absorption potential of partner S as of December 31, 2011?
a.$60,000
b.$70,000
c.$150,000
d.$240,000
25.The partnership of Hill, Kiner, and Polk has been dissolved and is in the process of liquidation. On July 1, 2011, just before the second cash distribution, the assets and equities of the partnership along with residual profit sharing ratios were as follows:
AssetsLiabilities and Equity
Cash$ 80,000Liabilities$ 60,000
Receivables-net20,000Hill, Capital 50%40,000
Inventories60,000Kiner, Capital 30%70,000
Equipment-net 40,000Polk, Capital 20% 30,000
Total assets$200,000Total Lia & Equity$200,000
Assume that the available cash is distributed immediately, except for a $10,000 contingency fund that is withheld pending complete liquidation of the partnership. How much cash should be paid to each of the partners?
HillKinerPolk
a.$35,000$21,000$14,000
b.$5,000$3,000$4,000
c.$0$10,000$0
d.$0$6,000$4,000
4. Hill Industries had sales in 2016 of $6,800,000 and gross profit of $1,135,000. Management is con...
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5. M&R company provided $2.000 in services to customers that are expected to pay the company...
M&R company provided $2.000 in services to customers that are expected to pay the company sometime in January following the company's year-end. Wage expenses of $1,000 have been incurred but are not paid as of December 31. M&R company has a $5,000 bank loan and has incurred (but not interest expense of $400 the year ended December 31. The company will pay the $400 interest in cash on January 2 following the company's year-end. M&R Company hired a firm to provide lawn services at payment occurring on the 15th of the following month. Payment for December services will occur on January 15 following the company's year-end M&R company has earned $200 in interest revenue from investments for the year ended December 31. The will be received on January 15 following the company's interest revenue will be received on January 15 following the company's year-end. Salary expenses of $900 have been earned by supervisors but not paid as of December 31. Prepare year-end adjusting journal entries for M&R Company as of December 31, 2017 for each of the above separate cases.