Question

Partnership Liquidation—Safe Payments

Several years ago, Ann Dennis, Jill Edwards, Lee Lacy, and Sarah Ingram formed a partnership to operate the Deli Sisters Cafe. Rerouting of bus lines caused declines in patronage to the extent that the partners have agreed to dissolve the partnership and liquidate the assets. The November 2, 2020, balance sheet of the Deli Sisters Cafe and other data appear below. Partnership income and losses are shared in a 2:3:1:4 ratio.

​​​​​​Additional information:

DELI SISTERS CAFÉ Balance Sheet November 2, 2020 Cash $25,000 Liabilities $60,700 Supplies 20,000 Loan-Ingram 15,000 Equipment 175,000 Capital-Dennis 62,000 Fixtures 50,000 Capital-Edwards 54,000 Capital-Lacy 22,000 Capital-Ingram 56,300 Total assets $270,000 Total liabilities and capital $270,000

1. During November, sold half of the fixtures for $18,000. Sold equipment with a book value of $30,000 for $21,000.
2. During December, paid all outside creditors. A neighboring restaurant bought Deli Sisters Cafe's supplies at 80 percent of cost. Sold the remaining fixtures for $8,000.
3. During January, sold equipment with a book value of $40,000 for $25,000.

Answer 1

Cash Available in Nov Month =

$25,000 Cash Availabe in Nov Month- Opening Balance of Cash On sale of half of fixture On sale of euipment $ 18,000 $21,000 $64,000 Loss on Sale in Nov Month Sale of Fiture (25000-18000) sale of Equipment(30000-21000) $7,000 $9,000 $ 16,000 Cash Availabe in Dec Month- Sale of Supplie Sale of Equipment Sale of Fixture $ 16,000 $ 105,000 $8,000 $ 129,000 ($ 60.700) $68,300 payment to creditor Loss on Sale in Dec Month Sale of Fiture (25000-8000) Sale of Supplie (20000-16000) $ 17,000 $4,000 $21,000 Cash Availabe in Jan Month- Euipment sold payment to loan ingram $ 25,000 ($15,000) $10,000 Loss on Sale in Jan Month sale of Equipment(40000-25000) $15,000 $15,000 Particular capital Loss of Nov Dennis Capital $62,000 $3,200 $ 58,800 $4,200 $54,600 $3,000 $51,600 Edward-capital $54,000 $4,800 $49,200 $6,300 $42,900 $4,500 $38,400 Lacy-capital $22.000 $1,600 $20,400 $2,100 $18,300 $1,500 $16,800 Loss of Dec Ingram- capital $56,300 $6,400 $49,900 $8,400 $41,500 $6,000 $35,500 Loss of Jan Cash Distibution Dennis Ingram November December January Edwards $21,106.00 $ 17,660.12 $23,707.44 $18,627.27 $3,626.14 $2,698.52 $7,322.49 $7,945.90 $1,180.60 $ 17,911.39 $ 18,019.39 $2,494.73