PE 12-5B Liquidating Partnerships. Need Solution to question. Prior to liquidati

Question

PE 12-5B Liquidating Partnerships. Need Solution to question. Prior to liquidating their partnership. Quinn and Kestner has capital accounts of $200,000 and $120,000 respectively. Prior to liquidation, the partnership had no cash assets other than what was realized from the sale of assets. These partnership assets were sold for $240,000. The partnership had $30,000 in liabilities. Quinn and Kestner share income and losses equally. Determine the amount received by Quinn as a final distribution from liquidation of the partnership.

Explanation / Answer

Since capital accounts of Quinn and Kestner are $200,000 and $120,000 Their profit/loss sharing ratio = 1:1 Profit from partnership= 240,000-30000= $210000 equally distributed= $105000 final distribution from liquidation of the partnership. Quinn= 200,000 +105000= $305000 Kestner= 120,000+105000=$225000

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