Question

Turner, Roth, and Lowe are partners who share income and loss in a 1:4:5 ratio. After lengthy disagreements among the partners and several unprofitable periods, the partners decide to liquidate the partnership. Immediately before liquidation, the partnership balance sheet shows total assets, $126,000; total liabilities, $78,000; Turner, Capital, $2,500; Roth, Capital, $14,000; and Lowe, Capital, $31,500. The cash proceeds from selling the assets were sufficient to repay all but $28,000 to the creditors.

Can I have an explanation of my error? When 28,000 was incorrect I enter -28,000.

Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required A Required B Required C Calculate the loss from selling the assets. $ 78,000 Liabilities before liquidation Proceeds from sale of assets (paid to creditors) Remaining liabilities Proceeds from sale of assets Book value of assets sold Loss on sale of assets 106,000 $ 50,000 126,000 76,000 Required B>

Exercise 12-11 Liquidation of partnership LO P5

Required:
a. Calculate the loss from selling the assets.
b. Allocate the loss from part a to the partners.
c. Determine how much, if any, each partner should contribute to the partnership to cover any remaining capital deficiency.

Answer 1

a)	Calculate the gain(loss) from selling the assets
	Liabilities before Liquidation					78,000
	Proceeds from sale of assets (paid to creditors)					50,000
	Remaining liabilities					28,000
	Proceeds from sale of assets					50,000
	Book value of assets sold					126,000
	loss on sale of assets					76,000
	working notes:
	Total book Value of assets					126,000
	total liabilities (Before liquidation)				78,000
	Total liabilities remaining after paying
	proceeds of asset sales to creditors				28,000
	cash proceeds from sale of assets					50,000
	loss on sale of assets					76,000
b)					Turner		Roth		Lowe	Total
	Initial Capital balances				2,500		14,000		31,500	48,000
	Allocation of gains(losses)			1./10	-7600	4./10	-30400	5./10	-38000	-76000
	Capital Balances after gains (losses)				-5,100		-16,400		-6,500	-28,000
c)					Turner		Roth		lowe	total
	liabilities to be paid by partner				-5,100		-16,400		-6,500	-28,000