Question

Required information [The following information applies to the questions displayed below) Turner, Roth, and Lowe are partners who share income and loss in a 14:5 ratio (in percents: Turner, 10%; Roth, 40%; and Lowe, 50%). The partners decide to liquidate the partnership. Immediately before liquidation, the partnership balance sheet shows total assets, $130,800, total liabilities, $82,000. Turner, Capital, $2,900Roth, Capital, 14,200, and Lowe, Capital, $31.700. Cash received from selling the assets was sufficient to repay all but $30,000 to the creditors. Required: a. Calculate the loss from selling the assets. b. Allocate the loss from part a to the partners. c. Determine how much each partner should contribute to the partnership to cover any remaining capital deficiency Complete this question by entering your answers in the tabs below. Required A Required B Required C Calculate the loss from selling the assets.

Answer 1

Solution:

a)

Calculate the loss from selling the asset:

Particulars	Amount
Laibilities before liquidation	$82,000
Less: cash received from selling the assets ($82,000 -$30,000)	($52,000)
Remaining liability towards the creditors	$30,000
Cash received from sale of asset	$52,000
Less: Book value of asset	($130,800)
Loss from sale of asset	($78,800)

b)

Particulars	Turner	Roth	Lowe
Profit sharing ratio	1/10	4/10	5/10
Loss allocation (78,800* ratio)	$7,880	$31,520	$39,400

c)

Particulars	Turner	Roth	Lowe	Total
Opening capital balance	$2,900	$14,200	$31,700	$48,800
Less: Loss allocation	($7,880)	($31,520)	($39,400)	($78,800)
Remaining capital balance	($4,980)	($17,320)	($7,700)	($30,000)

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