Liquidation—Cash distribution computation, safe payments schedule Fed, Ela, and

Question

Liquidation—Cash distribution computation, safe payments schedule Fed, Ela, and Luc have decided to liquidate their partnership. Account balances on January 1, 2016, are as follows: Cash 160000 Accounts Payable 60000 Other Assets 180000 Fed Capital (30%) 110000 340000 Ela Capital (30%) 50000 Luc Capital (40%) 120000 340000 The partners agree to keep a $30,000 contingency fund and to distribute available cash immediately. Required: Determine the amount of cash that should be paid to each partner Liquidation—Cash distribution computation, safe payments schedule Fed, Ela, and Luc have decided to liquidate their partnership. Account balances on January 1, 2016, are as follows: Cash 160000 Accounts Payable 60000 Other Assets 180000 Fed Capital (30%) 110000 340000 Ela Capital (30%) 50000 Luc Capital (40%) 120000 340000 The partners agree to keep a $30,000 contingency fund and to distribute available cash immediately. Required: Determine the amount of cash that should be paid to each partner

Explanation / Answer

Answer-Statement showing amount paid definition to each partner

Cash balance-160000

Less Retained as contingency fund -(30000)

Less amount paid to account payable -(60000)

Balance   -70000 This amount distruibuted to partner in 3:3:4 ratio

Less amount realised from other assets- 180000

distruibuted in partner in 3:3:4 ratio

Particulars Amount Payable Fed'Captial Ela'capital Luc'Capital Opening balance 60000 110000 50000 120000

Cash balance-160000

Less Retained as contingency fund -(30000)

Less amount paid to account payable -(60000)

Balance   -70000 This amount distruibuted to partner in 3:3:4 ratio

(60000) (21000) (21000) (28000)

Less amount realised from other assets- 180000

distruibuted in partner in 3:3:4 ratio

(54000) (54000) (72000) Closing Balance 35000(Loss) 25000(gain) 20000(loss) Gain of partner ela should be allocate between fed and luc in ratio of 3:4 10714 - 14286 Net loss 24286 5714

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