B ETR 6 NAHE: PROBLEM 1 The ABC Partnership decided to terminate its affairs as

Question

B ETR 6 NAHE: PROBLEM 1 The ABC Partnership decided to terminate its affairs as of December 31,2018. The following information is taken from the balance sheet that was prepared as of the date of termination: Cash Receivables (net) Inventories Fixed Assets (net) $ 80,000 $ 100,000 240,000 80,000 580,000 Liabilities A. Capital (30%) B. Capital (20%) C. Capital (5096) Total Liabilities Capital 580,000 360,000 80.000 Total Assets $1.100.000 $1.100,000 Assume that 75% of the noncash assets were sold for $450,000 and that 25% of the liabilities were paid at the first stage of liquidation. Prepare a safe payment schedule showing cash distribution at this point.

Explanation / Answer

Particulars A (30%) B (20%) C (50%) Liabilities Balance as on Liquidation Date $ 80,000.00 25% payment out of cash $-20,000.00 Remaining liability $ 60,000.00 Distribution of remaining liability $     -18,000.00 $     -12,000.00 $     -30,000.00 a Capital $   5,80,000.00 $   3,60,000.00 $       80,000.00 b Amount of Loss : 75% of non cash asset ($580000+$240000+$180000) $ -2,25,000.00 $ -1,50,000.00 $ -3,75,000.00 c Loss on sale ($1000000*75%-$450000) $     -90,000.00 $     -60,000.00 $ -1,50,000.00 d Subtotal $   2,47,000.00 $   1,38,000.00 $ -4,75,000.00 a+b+c+d Distribution of loss of C $ -2,85,000.00 $ -1,90,000.00 $                      -   Safe Payments $     -38,000.00 $     -52,000.00 $                      -

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