Question

As of January 1, 2018, the partnership of Canton, Yulls, and Garr had the following account...

As of January 1, 2018, the partnership of Canton, Yulls, and Garr had the following account balances and percentages for the sharing of profits and losses:

Cash $ 80,000
Noncash assets 205,000
Liabilities 47,000
Canton, capital (30%) 138,000
Yulls, capital (40%) 119,500
Garr, capital (30%) (19,500 )

The partnership incurred losses in recent years and decided to liquidate. The liquidation expenses were expected to be $10,000.

What would be the maximum amount Garr might have to contribute to the partnership to eliminate a deficit balance in his account?

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Answer #1

In the case of liquidation of a parternership assets are distributed among the partners after paying off liquidation expenses and outsiders liability.

In present case liquidation expenses are 10000 and liability is 47000. Hence final assets remaining after paying off expenses and liability are-

80000+205000-10000-47000 = $228000, 228000 will be distributed among partners in profit sharing ratio -

Garr's share = 228000*30% = 68400

Hence, Garr's final takeoff will be 68400-19500 = $48900

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