Question

A partnership has the following account balances: Cash, $87,000; Other Assets, $625,000; Liabilities, $359,000; Nixon (50...

A partnership has the following account balances: Cash, $87,000; Other Assets, $625,000; Liabilities, $359,000; Nixon (50 percent of profits and losses), $165,000; Cleveland (30 percent), $115,000; Pierce (20 percent), $73,000. The company liquidates, and $16,500 becomes available to the partners. Who gets the $16,500? Determine how much of this amount should be distributed to each partner.

Nixon Cleveland Pierce
Safe payments
Business   Accounting   
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Answer #1

Nixon (50%)

Cleveland (30%)

Pierce (20%)

Total

Safe Payments

$0

$12,100

$4,400

$16,500

Nixon (50%)

Cleaveland (30%)

Pierce (20%)

Total

Capital balance

$165,000

$115,000

$73,000

$353,000

Available cash balance

($16,500)

Potential loss

$336,500

Allocation of potential loss in profit sharing ratio

($168,250)

($100,950)

($67,300)

($336,500)

Available balance

($3,250)

$14,050 [3250 x 30/50]

$5,700 [3250 x 20/50]

$16,500

Deficiency of Nixon

$3,250

($1,950)

($1,300)

$0

Safe Payments

$0

$12,100

$4,400

$16,500
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