A local dental partnership has been liquidated and the final capital balances are as follows:
Atkinson, capital (40% of all profits and losses) $ 73,000
Kaporale, capital (30%) 33,080
Dennsmore, capital (20%) (48,000)
Rasputin, capital (10%) (58,000)
If Rasputin contributes additional cash of $22,000 to the partnership, what should happen to it?
Answer:
| Atkinson | Kaporale | Dennsmore | Rasputin | |
| Cash Distribution | $22,000 | $0 | $0 | $0 |
Explanation:
| Atkinson | Kaporale | Dennsmore | Rasputin | |
|---|---|---|---|---|
| Reported balances | $73,000 | $33,000 | $(48,000) | $(58,000) |
| Capital Contribution | + $22,000 | |||
| Adjusted Balances | $73,000 | $33,000 | $(48,000) | $(36,000) |
| Potential loss from Dennsmore and Rasputin ($84,000) split on 4:3 basis | $(48,000) | $(36,000) | $48,000 | $36,000 |
| Adjusted Balances | $25,000 | $(3,000) | 0 | 0 |
| Potential loss from Kaporale ($3,000) | $(3,000) | $3,000 | ||
| Cash distribution | $22,0000 | $0 | $0 | $0 |
i.e., The whole amount of $22,000 should go to Atkinson.
A local dental partnership has been liquidated and the final capital balances are as follows: