The partnership of Butler, Osman, and Ward was formed several years as a local t

Question

The partnership of Butler, Osman, and Ward was formed several years as a local tax preparation firm. Two partners have reached retirement age and the partners have decided to terminate operations and liquidate the business. Liquidation expenses of $57,000 are expected. The partnership balance sheet at the start of liquidation is as follows:

Prepare a predistribution plan for this partnership.

Cash $ 53,000 Liabilities $ 193,000 Accounts receivable 83,000 Butler, loan 53,000 Office equipment (net) 73,000 Butler, capital (25%) 165,000 Building (net) 225,000 Osman, capital (25%) 53,000 Land 215,000 Ward, capital (50%) 185,000 Total assets $ 649,000 Total liabilities and capital $ 649,000

Explanation / Answer

Butler capital and loan Osman Capital Ward Capital Beginning Balances $218,000 $53,000 $185,000 Assumuing $212000 loss ($106,000) ($53,000) ($53,000) Step 1 balances $112,000 $0 $132,000 Revised Ratio 57% 43% Assuming $51163loss $29,163 $22,000 Step2 Balances $40,837 $0 Working: Butler Osman Ward Beginning balances $165,000 $53,000 $185,000 25% 25% 50% Maximum loss (Step 1) $660,000 $212,000 $370,000 Step 1 Balances $112,000 $0 $132,000 Revised ratio 70% 30% Maximum loss (Step 2) $548,000 $238,000

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.