1. A partnership has the following capital balances: A ( 20% of profits and loss
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Question
1. A partnership has the following capital balances: A ( 20% of profits and losses) $ 100,000 B ( 30% of profits and losses) $ 120,000 C ( 50% of profits and losses) $ 180,000 If the partnership is to be liquidated and $ 30,000 becomes immediately available, who gets that money? Show your work: 2. The following balance sheet is for a local partnership in which the partners have become very unhappy with each other. To avoid more conflict, the partners have decided to cease operations and sell all assets. Using this information, answer the following questions. Each question should be viewed as an independent situation related to the partnerships liquidation. a. The $ 10,000 cash that exceeds the partnership liabilities is to be disbursed immediately. If profits and losses are allocated to Adams, Baker, Carvil, and Dobbs on a 2: 3: 3: 2 basis, respectively, how will the $ 10,000 be divided? b. The $ 10,000 cash that exceeds the partnership liabilities is to be disbursed immediately. If profits and losses are allocated on a 2: 2: 3: 3 basis, respectively, how will the $ 10,000 be divided? Show your work.
*The split is 20/30 or 40%/60%
*The split is 20/30 or 40%/60%
Requirement A: Since the partnership currently has total capital of $260,000, the $10,000 that is available would indicate maximum potential losses of $250,000. Adams, Baker, Carvil, Dobbs, Capital Capital Capital Capital Reported Balances Assumed $250,000 loss (2:3:3:2) Potential balances Potential loss from deficits (1:1) Current cash distribution Requirement B: Same cash to distribute, different allocations: Adams, Baker, Carvil, Dobbs, Capital Capital Capital Capital Reported Balances Assumed $250,000 loss (2:2:3:3) Potential balances, Step 1 Potential loss from deficits (4:6) Potential balances, Step 2 Potential loss from deficit (100%) Current cash distributionExplanation / Answer
PART 1
1. A partnership has the following capital balances: A ( 20% of profits and losses) $ 100,000 B ( 30% of profits and losses) $ 120,000 C ( 50% of profits and losses) $ 180,000 If the partnership is to be liquidated and $ 30,000 becomes immediately available, who gets that money? Show your work
A B C Total Reported Balances 100000 120000 180000 400000 Anticipated loss ($370,000) ie 400000-30000 rati 2:3:5 -74000 -111000 -185000 -370000 Potential balances 26000 9000 -5000 30000 Potential loss from C's deficit (split 2:3) -2000 -3000 Current cash distribution 24000 6000Related Questions
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