Liquidating Partnership-Deficiency Prior to liquidating their partnership, Jolly and Reynell had capital accounts of $19,000 and...

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Liquidating Partnership-Deficiency Prior to liquidating their partnership, Jolly and Reynell had capital accounts of $19,000

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Answer 1

Answer #1

Solution a:

Total capital balance of partners prior to liquidation = $19,000 + $79,000 = $98,000

Loss on liquidation = Capital balance - Sale value of assets = $98,000 - $38,000 = $60,000

Jolly's share of loss = $60,000 / 2 = $30,000

Amount of jolly deficiency = Share of loss - existing capital balance = $30,000 - $19,000 = $11,000

Solution b:

Amount distributed to Reynell, if Jolly unable to satisfy deficiency = Available cash in partnership = $38,000

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Answer 2

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