Question

e partnership of Adams, Betty, and Charles has the following trial balance on October 30, 2019 Credit Cash Accounts Receivable (net) Inventory Plant and Equipment (net) Accounts Payable Adams, Capital Betty, Capital Charles, Capital Total Debit 30,000 30,000 35,000 215,000 $ 50.000 120,000 90,000 50,000 S 310,000 $ 310,000 The partners share profits and losses as follows: Adams, 50 percent; Betty, 30 percent; and Charles, 20 percent. The partners are considering a total sum offer of S180,000 for the accounts receivable, inventory, and plant and equipment as of October 30. The partners have concluded it is best to liquidate their partnership by installments instead of accepting the offer of S180,000. Cash is distributed to the partners at the end of each month. A summary of the liquidation transactions follows: November 1 $45.000 is collected on all accounts receivable as well as all the inventory. 2. $5,000 liquidation expense were paid. 3. $30,000 paid to creditors as a partial payment. 4 $10,000 cash was retained in the business at the end of the month. December 5 Sold one equipment which had a book value of $15,000 for $20.000 6 $5,000 cash was retained in the business at the end of the month. January 5150,000 received on sale of all remaining plant and equipment. 8. Completed the liquidation process with no cash retained in the partnership Required: 1. On October 30", the partners are curious as to how cash will be distributed as it becomes available. Prepare a schedule that informs them of such a plan 2. Prepare a statement of partnership realization and liquidation along with clearly prepared supporting schedules of safe payments to partners. Assume each partner's capital balance reflects their maximum net worth

Answer 1

Answer As per the given data The book value and plant and of accounts receivable inventory equipment = 30000 + 35000+ 215 000 280000 Offer Cgiven ] - 180000 Therefore loss on sale of assets = 280000 - 180000 100000 As per the rule the loss will be shared as follows: Adams (50%) Betty [307] Charles [207] = 100000 * 50% - 50000 100000 x 30/ 30000 => 100000 x 207 PR0000 Revised capital balancos. Adams @e thч charles 120000 - 50000 = 70000 90000 - 30000 - 60000 50000 - 20000 =) 30000 Here, cash remaining a cash received from offer. paid to creditors = 180000 - 30000 = 150000

cash the basis of revised disho distribution on capital balans. Adams Betty = 150000 X (70000/100000) = 65625 150000 X 60000/160000) ? 150 000 X (30000/1G0000) - 2812 harles = 00/160000) - 56250 0000160000) - 28125