Question

The Drysdale, Koufax, and Marichal partnership has the following balance sheet immediately prior to liquidation:

Cash	$	43,000	Liabilities	$	45,500
Noncash assets		239,000	Drysdale, loan		25,000
			Drysdale, capital (50%)		80,500
			Koufax, capital (30%)		70,500
			Marichal, capital (20%)		60,500

1. a-1. Determine the maximum loss that can be absorbed in Step 1. Then, assuming that this loss has been incurred, determine the next maximum loss that can be absorbed in Step 2.
2. a-2. Liquidation expenses are estimated to be $22,000. Prepare a predistribution schedule to guide the distribution of cash. Further, modify the tags in explanation as well.
3. b. Assume that assets costing $81,000 are sold for $63,500. How is the available cash to be divided?

Answer 1

(261) Drysdale Lincludes cobital and loan) 10559 e 21000 C&C 50026000) Koufox Maxichal 70500/307. 235000 605/207312500 exysdale is the most vulnerable to danes cos assume the loss of $15000 & we Dayscale / Koupax Maxichal Reparted balances 405500 70 500 60500 Blumed loss. (211000) sblitm 405500) (63300) 42200) 5.3.2 basis 7200 18300 adusted balance The maximum lass that can be absorbed by the Partners in the defined 60:40 reation Kaufax 7200/0.6 120.00 Marichal. 45750 i Kaufax is the most whereable to lossess e we can assume the loss 12000 18300/0.4. Signature

Kaufax Marichal 18300 7200 adjusted balance assumed lass (12000) split on a 6:4 (7200) (4800 basis 18500 02 Balance of ter absorbed lows of 12000 Distscibution of Cash ofte deduction of estimated Listuidation expenses lash balance 43000 Less: Estimated liquidatim expense (22000) Excess cash to be distributed. 21000 43000 -b.ch I the assets are sold bare the value 63500 then the available loss for division will be Caclulated begining Cash balance Sale of so-cash assets 63500 Sub total Payment of liability (45500) Payment of estimated lifcidation exp. (22000 Call available for distribution 39000 106500 Signature

Pad Marichal The cash will be divided among partners 39000 Drysdale Kaufax will be divided un 5.3:2 19500 11 700 as no condition for distribution is given 7800 Signature