Question

A local dental partnership has been liquidated and the final capital balances are as follows: Atkinson,...

A local dental partnership has been liquidated and the final capital balances are as follows:

Atkinson, capital (40% of all profits and losses) $ 64,000
Kaporale, capital (30%) 24,000
Dennsmore, capital (20%) (31,000 )
Rasputin, capital (10%) (57,000 )

If Rasputin contributes additional cash of $25,000 to the partnership, what should happen to it?

Atkinson Kaporale Dennsmore Rasputin
Cash distribution

Homework Answers

Answer #1

If Rasputin Contributes and additional 25000, his net deficit will be:

-57000 + 25000 = -32000

The Total deficit of the partnership will become -32000 - 31000 = -63000. This amount will be allocated to Atkinson and Kaporle in the ratio of their income share (i.e) 40:30

Atkinsons revised capital is (64000 - 63000 X 40/70) = 28,000

Kaporales revised capital is (24000 - 63000 X 30/70) = -3000

This loss would again be absorbed by Atkinson resulting in a net distribution of 28000 - 3000 = $25,000

Hence Atkinson will be the only one to realise $25,000 from the partnership.

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