Question

A partnership has liquidated all assets but still reports the following account balances:

Beck, loan	$	5,000
Cisneros, capital (40%)		3,300
Beck, capital (20%)		(12,100	)	(deficit)
Sadak, capital (10%)		(8,100	)	(deficit)
Emerson, capital (20%)		16,000
Page, capital (10%)		(6,100	)	(deficit)

The partners split profits and losses as follows: Cisneros, 40 percent; Beck, 20 percent; Sadak, 10 percent; Emerson, 20 percent; and Page 10 percent.

Assuming that all partners are personally insolvent except for Sadak and Emerson, how much cash must Sadak now contribute to this partnership? (Do not round intermediate calculations. Round the final answer to nearest dollar amounts.)

Answer 1

Beck and Page are both insolvent and have negative capital balances (after offsetting the loan from Beck)
totaling $13,200. Absorption by the other partners of these losses would be as follows (on a 40:10:20 basis)
Partner	Share of loss			New Capital Balance
Cisneros	40/70	$13,200	$7,543	-$4,243
Sadak	10/70	$13,200	$1,886	-$9,986
Emerson	20/70	$13,200	$3,771	$12,229
Cisneros, who is also insolvent, now has a deficit capital of $4,243 that would have to be absorbed by Sadak
and Emerson (on a 10:20 basis)
Partner	Share of loss			New Capital Balance
Sadak	10/30	$4,243	$1,414	-$11,400
Emerson	20/30	$4,243	$2,829	$9,400
Thus, Sadak must contribute $9,400 that will go to Emerson