Distribution of Cash Upon Liquidation
Hewitt and Patel are partners, sharing gains and losses equally. They decide to terminate their partnership. Prior to realization, their capital balances are $42,000 and $28,000, respectively. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $53,000.
a. What is the amount of a gain or loss on realization?
$ |
b. How should the gain or loss be divided between Hewitt and Patel?
Hewitt | ||
Patel |
c. How should the cash be divided between Hewitt and Patel? If an amount is zero, enter "0".
Hewitt and Patel | ||
Distribution of Cash | ||
Hewitt | Patel | |
Capital balances before realization | $ | $ |
Division of gain or loss on realization | ||
Balances | $ | $ |
Cash distributed to partners | ||
Final balances | $ | $ |
Ans:
(a) Amount of gain or loss on realization
Capital Balances of Hewitt and Patel($42000+$28000) | $70000 |
Less: Cash balance | ($53000) |
Gain/(loss) | ($17000) |
(b) Division of gain or loss between Hewitt and Patel
Total Loss | ($17000) |
Loss to be divided equally | |
Hewitt ($17000 * 50%) | ($8500) |
Patel ($17000 * 50%) | ($8500) |
(c)
Hewitt and Patel
Distribution of Cash
Hewitt | Patel | |
Capital Balances Before Realization | $42000 | $28000 |
Division of gain or loss on Realization | ($8500) | ($8500) |
Balances | $33500 | $19500 |
Cash distributed to partners | ($33500) | ($19500) |
Final Balances | 0 | 0 |
Distribution of Cash Upon Liquidation Hewitt and Patel are partners, sharing gains and losses equally. They...
Distribution of Cash Upon Liquidation Hewitt and Patel are partners, sharing gains and losses equally. They decide to terminate their partnership. Prior to realization, their capital balances are $42,000 and $28,000, respectively. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $53,000. a. What is the amount of a gain or loss on realization?
Distribution of Cash Upon Liquidation Hewitt and Patel are partners, sharing gains and losses equally. They decide to terminate their partnership. Prior to realization, their capital balances are $42,000 and $28,000, respectively. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $53,000. a. What is the amount of a gain or loss on realization? $ b. How should the gain or loss be divided between Hewitt and Patel? Hewitt Patel c. How...
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