. The ABC partnership reports the following condensed balance sheet: Cash $1,010
ID: 2447218 • Letter: #
Question
. The ABC partnership reports the following condensed balance sheet:
Cash
$1,010,000
Liabilities
$1,600,000
Noncash assets
2,550,000
Partner A, capital
900,000
Partner B, capital
900,000
Partner C, capital
160,000
Total assets
$3,560,000
Total liabilities and partner capital
$3,560,000
The partners wish to liquidate the partnership. The noncash assets are sold for $2,000,000 with the loss distributed to the partners in the ratio of 30%/30%/40% to partner A, B, and C, respectively. The liabilities are paid in full. Partners make any capital contribution that is necessary to offset a negative balance in their respective Capital Accounts.
Required: Prepare a schedule detailing the liquidation of the assets, repayment of the liabilities, and distribution of the remaining cash to the partners.
Cash
$1,010,000
Liabilities
$1,600,000
Noncash assets
2,550,000
Partner A, capital
900,000
Partner B, capital
900,000
Partner C, capital
160,000
Total assets
$3,560,000
Total liabilities and partner capital
$3,560,000
Explanation / Answer
Balance Sheet Particular Cash + Noncash assets = Liab. + Partner A, capital + Partner B, capital + Partner C, capital Balance 1010000 + 2550000 = 1600000 + 900000 + 900000 + 160000 Non Cash Asset Sold 2000000 + -2550000 = 0 + -165000 + -165000 + -220000 3010000 + 0 = 1600000 + 735000 + 735000 + -60000 Liabilities Paid -1600000 + 0 = -1600000 + 0 + 0 + 0 1410000 + 0 = 0 + 735000 + 735000 + -60000 Partner C Contrbuted his deficit 60000 + 0 = 0 + 0 + 0 + 60000 1470000 + 0 = 0 + 735000 + 735000 + 0 Distribution of cash -1470000 + 0 = 0 + -735000 + -735000 + 0 Balance 0 + 0 = 0 + 0 + 0 + 0
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