The partnership of Hendrick, Mitchum, and Redding has the following account bala

Question

The partnership of Hendrick, Mitchum, and Redding has the following account balances:

This partnership is being liquidated. Hendrick and Mitchum are each entitled to 30 percent of all profits and losses with the remaining 40 percent going to Redding.

What is the maximum amount that Redding might have to contribute to this partnership because of the deficit capital balance?

How should the $17,000 cash that is presently available in excess of liabilities be distributed?

If the noncash assets are sold for a total of $62,000, what is the minimum amount of cash that Hendrick could receive?

Cash $ 48,000 Liabilities $ 31,000 Noncash assets 147,000 Hendrick, capital 123,000 Mitchum, capital 82,000 Redding, capital (41,000 )

Explanation / Answer

Part 1 - Calculation of maximum amount that redding might have to contribute to this partnership.

$58800

($147000 * 40%)

Part 2 - Distribution of cash of $17000 ($48000 - $31000)

Distribution of potential loss

$94000

($188000 * 3/6)

$94000

($188000 * 3/6)

Decision

Part 3 - Minimum amount hendrick would receive if non cash items are sold for $62000

$34000

($85000 * 4/10)

Distribution to Hendrick

Particulars Amount Capital deficit of redding $41000 Maximum loss on non cash items = $147000 Share of redding in loss of non cash items @ 40% share

$58800

($147000 * 40%)

Maximum amount redding has to contribute $99800

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