Question

Turner, Roth, and Lowe are partners who share income and loss in a 1:3:6 ratio. After lengthy disagreements among the partners and several unprofitable periods, the partners decide to liquidate the partnership. Immediately before liquidation, the partnership balance sheet shows total assets, $123,000; total liabilities, $92,250; Turner, Capital, $1,300; Roth, Capital, $9,425; and Lowe, Capital, $20,025. The cash proceeds from selling the assets were sufficient to repay all but $29,000 to the creditors.

  

(a)	Calculate the gain (loss) from selling the assets.

Answer 1

Solution:
	Gain (Loss) from selling assets	($59,750)
Working Notes:
	Total book value of assets			$123,000	a
	Total liabilities (before liquidation)		$92,250		b
	Total liabilities remaining after paying proceeds of asset sales to creditors		$29,000		c
	Cash proceeds from sale of assets			$63,250	d=b-c
	Gain  (Loss) on sale of assets			($59,750)	e=d-e
Notes:	Since, cash proceed from the sale is lower than the book value of the assets hence, its loss
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