Pаrt 5: Free Respоnse – Pаrtnership Liquidаtiоn (20 Pоints) Lindsey (“Partner A”), Stevie (“Partner B”), and Christine (“Partner C”) operate the Fleetwood Mac Partnership. The partners have been struggling to work together since 1974 and as a result, the partners have finally decided to “break the chain” and liquidate the partnership. Account balances just before the liquidation process began were as follows: Assets Liabilities & Capital Cash $ 5,000 Liabilities $ 80,000 Noncash assets 205,000 Partner A, Capital 50,000 Partner B, Capital 65,000 Partner C, Capital 15,000 Total $ 210,000 Total $ 210,000 The partners share profits and losses in the ratio of 3:5:2, respectively. All partners are currently solvent but can only make additional cash investments in the partnership of up to $1,800 each. The following is a schedule of transactions that occurred during the year in the liquidation process: February 1 Noncash assets with a book value of $110,000 were sold for $83,000. May 26 Paid all recorded partnership creditors. June 24 Distributed all but $2,000 of available cash to partners. July 12 Noncash assets with a book value of $8,000 were sold for $13,000. August 5 Distributed all available cash to partners. September 1 The remaining assets with a book value of $87,000 were sold for $9,000. October 3 Received cash from partners with a debit balance, to extent possible. November 26 Distributed all available cash to partners. Important Note regarding Grading: If you would like the opportunity to receive partial credit at the instructor's discretion (strongly recommended), please email me at cindy.dosch@warrington.ufl.edu a picture or a scan of your work within 15 minutes of submitting your exam. Be sure to clearly label your work. The work must agree to the final answer originally submitted within Canvas to be eligible for partial credit. Required: Determine the amounts each partner will receive from the distributions, if any, in the liquidation of the partnership and what amounts, if any, each partner must invest additionally into the partnership. Record your final answers to the required items in the table immediately below. As a general rounding rule, if required, round percentages to the second decimal (e.g., 5.75%) and final answers to the nearest whole dollar. If an amount is zero, write “0” – DO NOT leave blank. Item Partner A Partner B Partner C (a) Amount received, if any, from distribution on June 24 [partnera-a] [partnerb-a] [partnerc-a] (b) Amount received, if any, from distribution on August 5 [partnera-b] [partnerb-b] [partnerc-b] (c) Amount invested, if any, on October 3 [partnera-c] [partnerb-c] [partnerc-c] (d) Amount received, if any, from distribution on November 26 [partnera-d] [partnerb-d] [partnerc-d]
Pаrt 3: Free Respоnse – Interim Repоrting (15 Pоints) The following informаtion is аvailable for Willie Nelson Co.’s 2023 Q2 and Q3 interim tax provisions: In Q1, the Company recorded income tax expense of $54,280 for the three months ended March 31, 2023. The Company estimated that it would have annual earnings of $650,000 and $720,000 as of the end of Q2 and Q3, respectively. Actual quarterly earnings for each quarter through September 30, 2023 were as follows: Quarter Actual Quarterly Earnings Quarter 1 $ 240,000 Quarter 2 90,000 Quarter 3 170,000 The combined federal and state statutory tax rate is 20%. The Company estimated it would have the following annual book-tax differences as of the end of each quarter: Annual Estimate as of: Fines and Penalties Dividend Exclusion Quarter 2 $ 37,250 $ 73,000 Quarter 3 42,800 68,000 At the end of each quarter, the Company determined that it had the following quarterly tax-effected discrete items, primarily due to stock compensation windfalls and shortfalls. Amounts in parenthesis represent tax benefits. Quarter Quarterly Tax-Effected Discrete Items Quarter 1 $ 7,000 Quarter 2 (2,000) Quarter 3 4,000 Important Note regarding Grading: If you would like the opportunity to receive partial credit at the instructor's discretion (strongly recommended), please email me at cindy.dosch@warrington.ufl.edu a picture or a scan of your work within 15 minutes of submitting your exam. Be sure to clearly label your work. The work must agree to the final answer originally submitted within Canvas to be eligible for partial credit. Required: (14 Points) Determine the amount of income tax expense (benefit) for each quarterly period listed below (i.e., for the three months ended each quarter). Record your final answers to the required items in the table immediately below. As a general rounding rule, if required, round percentages to the second decimal (e.g., 5.75%) and final answers to the nearest whole dollar. If an amount is zero, write “0” – DO NOT leave blank. Item Your Answer (a) Income tax expense (benefit) for the three months ended June 30, 2023 [answer-a] (b) Income tax expense (benefit) for the three months ended September 30, 2023 [answer-b]
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