Question

The balance sheet for the Delphine, Xavier, and Olivier partnership follows:

Cash	$	60,000		Liabilities	$	40,000
Noncash assets		100,000		Delphine, capital		60,000
				Xavier, capital		40,000
				Olivier, capital		20,000
Total assets	$	160,000		Total liabilities and capital	$	160,000

Delphine, Xavier, and Olivier share profits and losses in the ratio of 4:4:2, respectively. The partners have agreed to terminate the business and estimate that $12,000 in liquidation expenses will be incurred.

What is the amount of cash that safely can be paid to partners prior to liquidation of noncash assets?

Answer 1

cash that safely can be paid to partners prior to liquidation of noncash assets
Cash available before liquidation of non cash assets	$   60,000.00
Less: Payment for liabilities	$ (40,000.00)
Less: Payment for liquidation expenses	$ (12,000.00)
Cash available for partners to share	$      8,000.00

It is necessary to pay liabilities and liquidation expenses with the available cash. Any cash left after that can be distributed to partners.

Answer-- Cash that safely can be paid to partners prior to liquidation of noncash assets=$8,000