EE 12-5 p 603 PE 12-5B Liquidating partnerships Show Me How OBJ.4 Prior to liqui
ID: 2540916 • Letter: E
Question
EE 12-5 p 603 PE 12-5B Liquidating partnerships Show Me How OBJ.4 Prior to liquidating their partnership, Manning and Adamo had capital accounts of $240,000 and $150,000 respectively. Prior to liquidation, the partnership had no cash assets other than what was realized from the sale of assets. These partnership assets were sold for $-410,000. The partnership had $80,000 of liabilities. Manning and Adamo share income and losses equally. Determine the amount received by Manning as a final distribution from liquidation of the partnership.Explanation / Answer
Capital balance (240,000+150,000): $ 390,000
Add: Liabilities: $80,000
Total assets: $470,000
Less: Sale value of assets: $410,000
Loss on sale of assets: -$60,000
Share of Manning in loss (-$60,000 /2) = -$30,000
Manning capital before liquidation: $240,000
Less: Loss on realisation adjusted: -$30,000
Final amount to be paid to Manning: $210,000
The amount received by Manning as a final distribution on liquidation: $210,000
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