Harding, Jones, and Sandy are in the process of liquidating and the partners have the following capital balances; $24,000, $24,000, and ($9,000) respectively. The partners share all profits and losses 16%, 48%, and 36%, respectively. Sandy has indicated that the ($9,000) deficit will be covered with a forthcoming contribution. The remaining partners have requested to immediately receive $20,000 in cash that is available. How should this cash be distributed?
Hanson | James | Smith |
24,000 | 24,000 | -9000 |
16% | 48% | 36% |
-9000 | ||
20,000 | ||
16/(16+48%)=25.00% | 48/(16+48%)=75.00% | |
24,000 + 24,000 + 20,000 =68,000 | ||
68,000*25%=17,000 | 68,000*75%=51,000 | |
24,000+24,000= 48,000 | ||
51,000-48,000=3,000 |
Sandy has Indicated that the ($9,000) deficit will be covered with a forthcoming contribution
The Remaining Capital Balance is = 24000 + 24000 = 48000
Total cash Available = 20000
Loss = 48000 - 20000
Loss = $ 28000
Loss is to be shared between Harding& Jones in ratio = 16%:48%
Harding Capital balance thereafter = 24000 - 28000*16/(16+48) = $ 17000
Jones Capital balance thereafter = 24000 - 28000*48/(16+48) = $ 3000
Cash to be Distributed in their capital balance ratio
Therefore Cash to be distributed to
Harding = $ 17000
Jones = $ 3000
Answer
Harding $ 17000 ; Jones $ 3000
Harding, Jones, and Sandy are in the process of liquidating and the partners have the following capital balances; $24,000, $24,000, and ($9,000) respectively.