Question

Cash $95,000 Non-cash assets 200,000 Liabilities 50,000 Partner 1 Capital 125,000 30% Partner 2 Capital 120,000...

Cash $95,000

Non-cash assets 200,000

Liabilities 50,000

Partner 1 Capital 125,000 30%

Partner 2 Capital 120,000 40%

Partner 3 Capital (20,000) 30%

Liquidation expense 10,000

Made $0 profit on non cash assets

What would be the maximum amount a partnership would have to contribute to the partnership to eliminate a deficit balance in his account?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Computation of Surplus amount available for distribution to partners:

Cash available = $ 95000

sale proceeds of non cash assets = $ 200000 (equal to book value, since it is given that the assets are sold at no profit no loss)

Liquidation expenses = $10000

Amount payable for liabilities = $ 50000

Therefore, Surplus Amount available for distribution to partners = 95000 + 200000 - 10000 - 50000

= $ 235000

Share of each partner in the Surplus amount:

Partner 1 (30%) : 70500

Partner 2 (40%) : 94000

Partner 3 (30%) : 70500

Negative balance in Partner 3 capital : (20000)

Conclusion:

Since the share in surplus amount available (70500) is more than negative balance (20000) in the account, Partner 3 is not required to contribute even a single cent and rather, he is entitled for excess amount available after setting off the negative balance to his account i.e., 70500 - 20000 = 50500.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Liquidation schedule—positive capital accounts The ABC partnership reports the following condensed balance sheet: Cash $200,000 Liabilities...
Liquidation schedule—positive capital accounts The ABC partnership reports the following condensed balance sheet: Cash $200,000 Liabilities $300,000 Noncash assets 600,00 Partner A, capital 125,000 Partner B, capital 125,000 Partner C, capital 250,000 Total assets $800,000 Total liabilities and partner capital $800,000 The partners wish to liquidate the partnership. The noncash assets are sold for $450,000 with the loss distributed to the partners in the ratio of 30%/30%/40% to partner A, B, and C, respectively. The liabilities are paid in full....
The Eaton, Kraft and Thornton partnership began the process of liquidation with the following balance sheet:...
The Eaton, Kraft and Thornton partnership began the process of liquidation with the following balance sheet: cash 20,000 liabilities 200,000 noncash assets 430,000 eaton capital, 50,000 kraft, capital 80,000 thorton, capital 120,000 total 450,000 450,000 Eaton, Kraft and Thornton share profits and losses in a ratio of 2:3:5. Non-cash assets are sold for $200,000. Liquidation expenses are expected to be $12,000. Prepare a schedule using the format provided below to show the liquidation of the partnership and final distribution to...
As of January 1, 2018, the partnership of Canton, Yulls, and Garr had the following account...
As of January 1, 2018, the partnership of Canton, Yulls, and Garr had the following account balances and percentages for the sharing of profits and losses: Cash $ 80,000 Noncash assets 205,000 Liabilities 47,000 Canton, capital (30%) 138,000 Yulls, capital (40%) 119,500 Garr, capital (30%) (19,500 ) The partnership incurred losses in recent years and decided to liquidate. The liquidation expenses were expected to be $10,000. What would be the maximum amount Garr might have to contribute to the partnership...
The ABC partnership reports the following condensed balance sheet: Cash $ 480,000 Liabilities $2,000,000 Noncash assets...
The ABC partnership reports the following condensed balance sheet: Cash $ 480,000 Liabilities $2,000,000 Noncash assets 3,160,000 Partner A, capital 290,000 Partner B, capital 1,100,000 Partner C, capital 250,000 Total assets $3,640,000 Total liabilities and partner capital $3,640,000 The partners wish to liquidate the partnership. The noncash assets are sold for $2,300,000 with the loss distributed to the partners in the ratio of 30%/30%/40% to partner A, B, and C, respectively. The liabilities are paid in full. Assume that any...
A, B, C partnership began the process of liquidation with the following balance sheet: Assets Liabilities...
A, B, C partnership began the process of liquidation with the following balance sheet: Assets Liabilities and Capital Cash P 16,000 Liabilities P 150,000 Non-cash assets 434,000 A, Capital (30%) 80,000 B, Capital (20%) 90,000 C, Capital (50%) 130,000 Total P 450,000 P 450,000 Liquidation expenses are expected to be P12,000. After the liquidation expenses of P12,000 had been paid and the non-cash assets are sold, C had a deficit of P8,000. For what amount were the non-cash assets sold?
9. Final distribution of partnership cash in made in according to what rule: a. partner with...
9. Final distribution of partnership cash in made in according to what rule: a. partner with highest capital balance paid first b. partner who joined the partnership earliest is paid first c. partner who worked the hardest is paid first d. partners are paid in proportion to original profit and loss percentages e. partners are paid in proportion to final capital balances 10. Which is true about obligations due to partnership creditors in a liquidation of a partnership. a. partnership...
Mary and Carol each contribute $50,000 to their newly formed general partnership (each partner is required...
Mary and Carol each contribute $50,000 to their newly formed general partnership (each partner is required to restore any deficit in the partner’s capital account upon liquidation of the partnership). The partnership borrows $900,000 on a non-recourse basis and buys a $1,000,000 building. The building generates $100,000 of depreciation a year for ten years, and the partnership has no other items of income or loss. The partners agree to allocate all losses equally until their capital accounts are zero; after...
. The CAT partnership is terminating because of financial problems. Partner T is insolvent. Just before...
. The CAT partnership is terminating because of financial problems. Partner T is insolvent. Just before beginning liquidation, the partnership had the following account balances: Debit Credit Cash $ 60,000 Noncash assets 355,000 Liabilities $240,000 C, capital 60,000 A, capital 70,000 T, capital 45,000 C, A, and T share profits and losses in a ratio of 2:2:1. They expect liquidation expenses of $10,000. T has personal assets with a fair value of $12,000 and liabilities of $50,000. Required: Assume that...
Liquidation schedule—one negative capital account with no capital contribution The ABC partnership reports the following condensed...
Liquidation schedule—one negative capital account with no capital contribution The ABC partnership reports the following condensed balance sheet: Cash $580,000 Liabilities $800,000 Noncash assets 1,200,000 Partner A, capital 450,000 Partner B, capital 450,000 Partner C, capital 80,000 Total assets $1,780,000 Total liabilities and partner capital $1,780,000 The partners wish to liquidate the partnership. The noncash assets are sold for $900,000 with the loss distributed to the partners in the ratio of 30%/30%/40% to partner A, B, and C, respectively. The...
The balance sheet for the Delphine, Xavier, and Olivier partnership follows: Cash 71520 Liabilities 48000 non...
The balance sheet for the Delphine, Xavier, and Olivier partnership follows: Cash 71520 Liabilities 48000 non cash assets 132000 Delphine, capital 60960 Xavier, capital 56000 Oliver, capital 38560 Total assets 203520 Total Liabilities and Capital 203520 Delphine, Xavier, and Olivier share profits and losses in the ratio of 3:4:3, respectively. The partners have agreed to terminate the business and estimate that $15,200 in liquidation expenses will be incurred. A) What is the amount of cash that safely can be paid...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT