Question

The partnership of Winn, Xie, Yang, and Zed has the following balance sheet:

Cash	$	43,000	Liabilities	$	66,000
Other assets		282,000	Winn, capital (50% of profits and losses)		73,000
			Xie, capital (30%)		90,000
			Yang, capital (10%)		53,000
			Zed, capital (10%)		43,000

Zed is personally insolvent, and one of his creditors is considering suing the partnership for the $18,000 that is currently owed. The creditor realizes that this litigation could result in partnership liquidation and does not wish to force such an extreme action unless Zed is reasonably sure of obtaining at least $18,000 from the liquidation.

Determine the amount for which the partnership must sell the other assets to ensure that Zed receives $18,000 from the liquidation? Liquidation expenses are expected to be $28,000. (Do not round intermediate calculations.)

Answer 1

As per balance sheet current liabilities are $66000 and at the time of liquidation , Liquidation expenses of $28000 are to be paid.
Total amount to be paid is $94000 (66000+28000)
Currently cash is $43000. after using cash to pay liabilities, remaining liabilities will be $23000 (66000-43000)
Liabilities to paid from Non cash assets	$23,000
Liquidation expenses to be paid	$28,000
Minimum cash distribution (18000/10%)	$180,000
Minimum amount at which non cash assets to be sold	$231,000