Question

# Distribution of Cash Upon Liquidation Pryor and Lester are partners, sharing gains and losses equally. They...

Distribution of Cash Upon Liquidation

Pryor and Lester are partners, sharing gains and losses equally. They decide to terminate their partnership. Prior to realization, their capital balances are \$18,000 and \$12,000, respectively. After all noncash assets are sold and all liabilities are paid, there is a cash balance of \$23,000.

a. What is the amount of a gain or loss on realization?

 Gain or Loss Amount \$

b. How should the gain or loss be divided between Pryor and Lester?

 Pryor Lester

c. How should the cash be divided between Pryor and Lester? If an amount is zero, enter "0".

 Lester and Pryor Distribution of Cash Pryor Lester Capital balances before realization \$ \$ Division of gain or loss on realization Balances \$ \$ Cash distributed to partners Final balances \$ \$

a.

Cash Balance............................................\$23,000

Capital Balances(\$18,000+\$12,000)...........\$30,000

Loss.............................................................(\$7,000)

b.Because they are sharing profit and losses equally

 Pryor(\$8,000/2) \$3,500 Lestor(\$8,000/2) \$3,500

c.

Distribution Of cash
Pryor Lestor
Capital Balances before realization \$18,000 \$12,000
Division of gain or loss on realization \$3,500 \$3,500
 Balances
\$14,500 \$8,500
Cash distributed to partners \$14,500 \$8,500
Final Balances \$0 \$0

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