Question

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

Cash	71520	Liabilities	48000
non cash assets	132000	Delphine, capital	60960
		Xavier, capital	56000
		Oliver, capital	38560
Total assets	203520	Total Liabilities and Capital	203520

Delphine, Xavier, and Olivier share profits and losses in the ratio of 3:4:3, respectively. The partners have agreed to terminate the business and estimate that $15,200 in liquidation expenses will be incurred.

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

B) Which partner should receive the cash distribution from (a)?

Answer 1

A)Computation of Amount of Cash can be paid to Partneer Prior to Liquidation of Non-Cash Asset
Particular		Amount
Available Cash		$71,520.00
Less: Liabilities		$48,000.00
Less: Liquidation Expense		$15,200.00
Amount available for distribution		$8,320.00

B)

Cash Avialable for distribution of $8320 will be distributed to Delphine Capital to extent (60960-56000) i.e. 4960 because , his capital account shows highest credit balance by $4960 from credit balance of second highest Partner's Xavier and rest of the amount of ( 8320-4960) i.e. $3360 will be paid to Partner's Xavier.