Question

The Larry, Moe, and Curly Partnership had capital balances of $55,000 for Larry; $60,000 for Moe;...

The Larry, Moe, and Curly Partnership had capital balances of $55,000 for Larry; $60,000 for Moe; and $4,000 for Curly. There were assets of $100,000 in cash and $75,000 in AR. There were AP of $45,000 and $11,000 in Salaries Payable. The partnership was liquidated. The income and expense ratio as per the partnership agreement was to split all items evenly. The AR was sold for $50,000.

Homework Answers

Answer #1

Loss on realization of AR = ( Actual amount receivable - amount received )

= 75000 - 50,000

= 25,000

The AP and salary payable are paid at book value so there is no profit or loss on realization.

As all the partners share expenses and incomes equally the loss of realization of AR $ 25,000 is borne equally by all partners i.e., $ 8,333 each

LARRY MOE CURLY
Credit balance of each partner 55,000 60,000 4,000
Loss on realization of AR borne by each partner equally (8,333) (8,333) (8,334)
Cash to be paid to partner / (Cash to be received from the partner ) 46,667 51,667 (4,336)

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