The Partnership of Rachel, Adams, and Nixon has the following trail balance on N

Question

The Partnership of Rachel, Adams, and Nixon has the following trail balance on November 30, 2015

The partners share profits and losses as follows: Rachel, 50 percent; Adams, 30 percent; and Nixon, 20 percent. The partners are considering an offer of $180,000 for the accounts receivable, inventory, and plant and equipment as of November 30. The $180,000 will be paid to creditors and the partners in installments, the number and amounts of which are to be negotiated.

Required:

Prepare Cash distribution Plan as of November 30, 2015, showing how much cash each partner will receive if the offer to sell the assets is accepted.

Debit Credit Cash 20,000 Accounts Receivable (net) 30,000 Inventory 35,000 Plant and Equipment(net) 215,000 Accounts Payable 40,000 Rachel, Capital 120,000 Adams, Capital 90,000 Nixon, Capital 50,000 Total 300,000 300,000

Explanation / Answer

cash received cash 20000 sale of receivables,plant,inventory 180000 LesS:payment to creditors 40000 net balance 160000 rachel adams nixon capital op balance 120000 90000 50000 Less:cash distribution 80000 48000 32000 in profit ratio balance deficiency 40000 42000 18000

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