Question

Following is a series of independent cases. In each situation, indicate the cash distribution to be...

Following is a series of independent cases. In each situation, indicate the cash distribution to be made to partners at the end of the liquidation process. Unless otherwise stated, assume that all solvent partners will reimburse the partnership for their deficit capital balances.

Part A

The Buarque, Monte, and Vinicius partnership reports the following accounts. Vinicius is personally insolvent and can contribute only an additional $22,000 to the partnership.

Cash $ 143,000
Liabilities 48,000
Monte, loan 46,000
Buarque, capital (50% of profits and losses) 24,000
Monte, capital (25%) 53,000
Vinicius, capital (25%) (28,000 ) (deficit)

Part B

Drawdy, Langston, and Pearl operate a local accounting firm as a partnership. After working together for several years, they have decided to liquidate the partnership’s property. The partners have prepared the following balance sheet:

Cash $ 33,000 Liabilities $ 41,500
Drawdy, loan 18,000 Langston, loan 26,000
Noncash assets 176,000 Drawdy, capital (40%) 78,000
Langston, capital (30%) 63,000
Pearl, capital (30%) 18,500
Total assets $ 227,000 Total liabilities and capital $ 227,000

The firm sells the noncash assets for $133,000; it will use $28,000 of this amount to pay liquidation expenses. All three of these partners are personally insolvent.

Indicate the cash distribution to be made to partners at the end of the liquidation process. Unless otherwise stated, assume that all solvent partners will reimburse the partnership for their deficit capital balances.
Buarque, Capital Monte, Loan and Capital Vinicius, Capital
Beginning balances
Contribution by Vinicius
Capital balances
Elimination of Vinicius's deficit
Final distribution

Indicate the cash distribution to be made to partners at the end of the liquidation process. Unless otherwise stated, assume that all solvent partners will reimburse the partnership for their deficit capital balances. (Do not round intermediate calculations. Round the final answer to nearest dollar amounts.)
Drawdy, Loan and Capital Langston, Loan and Capital Pearl, Capital
Beginning balances
Loss on disposal
Liquidation expenses
Capital balances
Allocation of Pearl's deficit
Final distribution
Business   Accounting   
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Answer #1

Part A:

Buarque, Capital Monte, Loan and Capital Vinicus, Capital
Beginning balances 24000 99000 -28000
Contribution by Vinicus 0 0 22000
Capital balances 24000 99000 -6000
Elimination of Vinicus's deficit -4000 -2000 6000
Final distribution 20000 97000 0

The deficit in Vinicus's capital account is borne by Buarque and Monte in their profit sharing ratio of 50 : 25.

Part B:

Drawdy, Loan and Capital Langston, Loan and Capital Pearl, Capital
Beginning balances 60000 89000 18500
Loss on disposal -17200 -12900 -12900
Liquidation expenses -11200 -8400 -8400
Capital balances 31600 67700 -2800
Allocation of Pearl's deficit -1600 -1200 2800
Final distribution 30000 66500 0

The deficit in Pearl's capital account is borne by Drawdy and Langston in their profit sharing ratio of 40 : 30.

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