TRUMP, CLINTON AND OBAMA HAVE BEEN PARTNERS IN THE HUMBLE LAW FIRM FOR MANY YEAR
ID: 2453689 • Letter: T
Question
TRUMP, CLINTON AND OBAMA HAVE BEEN PARTNERS IN THE HUMBLE LAW FIRM FOR MANY YEARS. TRUMP AND OBAMA ARE 40% PARTNERS WHILE CLINTON WAS A 20% PARTNER. THEIR BALANCE SHEET ON DECEMBER 31, 2015 IS AS FOLLOWS:
CASH $100,000
ACCTS REC. $200,000
INVENTORY $100,000
EQUIPMENT $500,000
A/D EQUIP. ($200,000)
LAND $400,000
TOTAL ASSETS $1,100,000
ACCTS PAY $200,000
TRUMP CAPITAL $500,000
OBAMA CAPITAL $300,000
CLINTON, CAPITAL $100,000
On January 1, 2016 they have announced the termination of their partnership.
What if any safe payments can each of the partners take on January 1?
On January 15th the partnership sells all of its account receivables to a bank for $150,000. If no partner took a safe payment on January 1, what if any safe payments can each of the partners take on January 15th?
On January 23rd, the partnership sells the inventory for $125,000. If no partner has taken a safe payment, how much could each take on January 23rd?
On January 30th, the partnership sells the equipment for $180,000 and pays off the account payable. If no partner has taken any safe payments up to now, what safe payments can each partner take on January 30th?
On February 10th the partnership sells the land for $280,000 and ends the partnership. Assuming all partners have plenty of other assets to cover any shortages in their partnership account, how much will each partner collect (or pay) at the termination of the partnership?
Using the information in part e, if any partner with a negative capital account cannot cover it, how much does each partner collect at the termination of the partnership?
Explanation / Answer
Cash Provision Safe cash Total Share of cash payment Date Transaction Sale Book Gain Balance Accts Pay Available Paid Trump Clinton Obama 1-Jan-15 Cash Balance Value Value or (Loss) 100000 100000 0 0 0 0 0 15-Jan-15 Sale of Accounts Receivable 150000 200000 -50000 250000 200000 50000 50000 20000 10000 20000 23-Jan-15 Sale of Inventory 125000 100000 25000 375000 200000 175000 125000 70000 35000 70000 30-Jan-15 Sale of Equipment 180000 300000 -120000 555000 200000 355000 180000 142000 71000 142000 10-Feb-15 Sale of Land 280000 280000 0 835000 200000 635000 280000 254000 127000 254000 Total 735000 880000 -145000 635000 If they did not take any payment before the date of safe cash payment Question Trump Clinton Obama a. 1-Jan-15 0 0 0 b. 15-Jan-15 20000 10000 20000 c. 23-Jan-15 70000 35000 70000 d. 30-Jan-15 142000 71000 142000 See Note Provission for Accounts payable already been created on 1st Jan and 15th Jan for Accounts Payable. So no more provision is required to create. Only cash will be paid to accounts payable. Question e. If they did not take any payment before the date of safe cash payment Trump Clinton Obama Payment amount 254000 127000 254000 If they took all safe cash payment previously final payment will be as under Trump Clinton Obama Payment amount 112000 56000 112000
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