Question

Problem 1-P14.15 Close Book and Prepare Cash Distribution Plan Arnold, Bell and Crane agree to liquidate their partnership as soon as possible. The partnership agreement calls for salaries of $50,000 and $70,000 for Arnold and Bell, respectively, any remaining profit or loss is divided in a 2:5:3 ratio. The preclosing trial balancce for the partnership at July 31, 2020, the end of the firm's fiscal year, is: Account Debit Credit Cash $ 95,000 Other Assets $ 350,000 Liabilities $ 114,000 Loan payable--Crane $ 36,000 Capital--Arnold $ 85,000 Capital--Bell $ 70,000 Capital--Crane $ 40,000 Sales $ 732,000 Operating Expenses $ 520,000 Drawings--Arnold $ 60,000 Drawings--Bell $ 27,000 Drawings--Crane $ 25,000 Total $1,077,000 $1,077,000 Required: a. Prepare a schedule showing the balances in the capital accounts prior to liquidation. b. Prepare a cash distribution plan for the liquidation. c. Compute the amount that must be realized from the other assets to liquidate the liabilities and drive all capital accounts to zero.

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Answer 1

Answers @ prepare a schedule showing the balances in capital accounts prior to liquidation ; profit available = sales-operating Expenses = $734,000 - $50,000 : 12,000 narina ---> - $ 12,000 is distributed among narince in the 213,000 is Martin is; 2:5:3, ARNOLD BELL CRANE $ 85.000 701000 40000 capital balance profit available Salary 63,660 $42,400 $106000 $50,000 17 000 Drawings $-60,000 -25,000 -357000 Nel capital balance & 117, 400 $219,000 78,600 prepare a cash distibution plan for the liquidation

cash balance Available -cach payment to be made p othorliabilities $114,000 $ 95,000 $470.000 - Loan from trane 36,000 111, $219.000 Arnold capital bell capital Crane Capital 78,600 365,000 $565,000 © complete the amount : from other assets, $ 490,000 must be realized to liquidate the liabilities and drive all capital accounts: to be నెలా