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Partner D has a deficit balance of $45,000 after the sale of partnership assets, the other...

Partner D has a deficit balance of $45,000 after the sale of partnership assets, the other two partners, M and S, have credit balances of $110,000 and $90,000 each. The profit and loss ratios for the partners are D, 20%, M, 50%, and S, 30%. Partner D does not have the ability to contribute assets to cover the deficit. Answer the following, and explain your answers: (1) how much cash is available to the partners? and (2) how much will each partner receive?

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Answer #1

1)Total cash availability= 45000+110000+90000 =$245000. This is the total cash available to partners as legally D has to bring $ 45000 and this is to be shared by M&S Partners.


​2) Each partner receive on the partners sharing ratio of D,20%, M, 50%, S,30%.
​ Distributing the above in their ratio is

As D cannot contibute his loss of $45000 is shared by M & S in their profit sharing ratio
Therefore M Contribution is $45000*50/80 28125
and S Contribution is $45000*30/80 16875
Partner D M S
Present balance $(45000) $110000 $90000
Loss of D shared by M&S $45000 $(28125) $(16875)
Net Receivable 0 $81875 $73125
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