Question

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

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