Question

Distribution of Cash Upon Liquidation

Bray, Lincoln, and Mapes arranged to import and sell orchid corsages for a university dance. They agreed to share equally the net income or net loss of the venture. Bray and Lincoln advanced $390 and $600 of their own respective funds to pay for advertising and other expenses. After collecting for all sales and paying creditors, the partnership has $1,590 in cash.

Use the minus sign to indicate any deficiency for the capital accounts.

For those boxes in which you must enter subtractive or negative numbers use a minus sign.

a. How much net income was earned from the venture?
$

b. How should the money be distributed?

	Bray	Lincoln	Mapes	Total
Capital balances and cash distribution	$	$	$	$

c. Assume that the partnership has only $840 instead of $1,590. Do any of the three partners have a capital deficiency?

If so, how much?
$

	Bray	Lincoln	Mapes	Total
Capital balances	$	$	$	$

Answer 1

who invest and share the profits and lesses Ans. Partnership It is that form of organization which is owned and managed by two or Person's according to a pre determined ratio, more Liquidating Partnership - The winding up of process of Partnership is called liquidation of farther ship. At the time of liquidation of partnership realization of account is fepared m the (a) Determine the net gucome earned from venture Net Income carned Remaining cash after payment ef liabilities Any Expense Made ofrom Partner 15 90 - Net Income Earned (390 + 600) Net Income farned boo L. (b) How should the money be Distributed B Р M " Total 390 600 Capital Invested ११० Net Income earned (1011) 200 2eo Capital Balance and 590 800 200 Cash Distribution 200 boo 1590

© If Partnership has only 840 Instead of 159 then, the Met Loss Earned is, Net Less Earned 840 - (390+600) (150) Neet Loss Earned Calculation of capital Deficiency? B в L 6oo Total 990 390 Capital Invested Net Loss (lilil) (50) (50) (50) (150) capital Balances 340 550 |(50) 1840 Thus, If the fart her ship has only 840 Instead of 1590 then the Mapes capital den ficiency of 50, has 1