Question

Liquidating Partnerships-Deficiency Prior to liquidating their partnership, Underwood and Haines had capital accounts of $25,000 and $105,000, respectively. The partnership assets were sold for $53,000. The partnership had no liabilities. Underwood and Haines share income and losses equally, Required: a. mine the amount of Underwood's deficiency. b. Determine the amount distributed to Haines, assuming Underwood is unable to satisfy the deficiency. Feedback 7 Check My Work 1. Begin with Underwood's equity prior to liquidation 2. Sell the assets and recognize any gain or loss 3. Allocate the gainvloss to partner capital accounts based on equal share 4. Add beginning equity plus allocated in loss to determine liquidation deficiency b. If a partner is unable to satisfy a deficiency, the balance is shared among the remaining partners.

Answer 1

53000 131000 solution Sale of assets Carrying value of assets [26000 +105000] Loss on Liquidation Onderwood equity prior to Liquidation underwood share of loss (50% X 78000) underwood deferency 78000 26000 39000 (13000)

b) 53000 = 105000 - 39000 Share of loss – 13000 under wood deficiency, also equal the amount realezed from asset sulez.