Question

The Burr, Clinton and Hamilton partnership is entering into liquidation with the following account balances: cash...

The Burr, Clinton and Hamilton partnership is entering into liquidation with the following account balances:

cash 117,000 liabilities 82,000

noncash assets 305,000 burr, capital 80,000

clinton, capital 100,000

howe, capital 160,000

total 422,000 422,0000

Estimated partnership liquidation expenses were $18,000. The partners share profits and losses in a ratio of 20:30:50.

What amount of cash was available for safe payments based on the above information?

How should the amount of safe cash payments be distributed? Use format provided below:

Based on the information above what level of losses can the Partnership bear to ensure that each Partner would realize a cash

distribution. SHOW ALL WORK IN SUPPORT OF YOUR COMPUTATION


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Answer #1
Assets Liabilities Capital Accounts
Cash Non cash assets Burr Clinton Howe
Balance 117000 305000 82000 80000 100000 160000
Less: Estimated liquidation expense -18000 -3600 -5400 -9000
          Liabilities payment -82000 -82000
Balance available 17000 305000 0 76400 94600 151000
Less: Loss of Noncash assets -305000 -61000 -91500 -152500
Balance 17000 0 0 15400 3100 -1500
Less: Loss of Howe in Profit & Loss ratio -600 -900 1500
Cash payment (Safe to be made) -17000 -14800 -2200 0
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