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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 partners with a negative balance in their respective Capital Accounts are insolvent and, therefore, do not make any capital contribution to the partnership (i.e., remaining partners must absorb the negative Capital Account according to their profit sharing formula). Required: Prepare a schedule detailing the liquidation of the assets, repayment of the liabilities and distribution of the remaining cash to the partners.

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Answer #1
Partners
Cash Noncash assets Liabilities A B C
Balances 480000 3160000 2000000 290000 1100000 250000
Sell noncash assets 2300000 -3160000 0 -258000 -258000 -344000
Balances 2780000 0 2000000 32000 842000 -94000
Payment of liabilities -2000000 0 -2000000 0 0 0
Balances 780000 0 0 32000 842000 -94000
C's loss distribution (3:3) 0 0 -47000 -47000 94000
Remaining cash 780000 0 0 -15000 795000 0
A's loss distributed to B 0 0 0 15000 -15000 0
Balances 780000 0 0 0 780000 0
Cash distribution to partners -780000 0 0 0 -780000 0
Final balances 0 0 0 0 0 0
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