Question

A partnership has liquidated all assets but still reports the following account balances:

Beck, loan	$	9,000
Cisneros, capital (40%)		4,800
Beck, capital (20%)		(9,600	)	(deficit)
Sadak, capital (10%)		(10,400	)	(deficit)
Emerson, capital (20%)		15,600
Page, capital (10%)		(15,000	)	(deficit)

The partners split profits and losses as follows: Cisneros, 40 percent; Beck, 20 percent; Sadak, 10 percent; Emerson, 20 percent; and Page 10 percent.

Assuming that all partners are personally insolvent except for Sadak and Emerson, how much cash must Sadak now contribute to this partnership? (Do not round intermediate calculations. Round the final answer to nearest dollar amounts.)

Answer 1

	Beck,Sadack and Page has deficit balances
	But,Sadak is not an insolvent
	Hece,deficit of Beck and page:
				$	$
	Beck, capital			-9600
	Beck,loan			9000	-600
	Page, capital				-15000
	Total deficit				-15600
	Loss of $15600 has to be absorbed by Cisneros,Sadak and Emerson @ 40:10:20
	Share of loss:
					$
	Cisneros		15600*(40/70)		8914
	Sadak		15600*(10/70)		2229
	Emerson		15600*(20/70)		4457
					15600
	New capital balances:
		Beg. Bal	Share of loss	New bal.
	Cisneros	4800	8914	-4114
	Sadak	-10400	2229	-12629
	Emerson	15600	4457	11143
	Cisneros loss of $ 4114 has to be borne by Sadak and emerson @ 10:20
	Share of loss:
					$
	Sadak		4114*(10/30)		1371
	Emerson		4114*(20/30)		2743
	Total				4114
	New capital balances:
		Beg. Bal	Share of loss	New bal.
	Sadak	-12629	1371	-14000
	Emerson	11143	2743	8400
	Sadak has to contribute $ 14000

Answer 2

Answer is $14000

Beck and Page are both insolvent and have negative capital balances (after offsetting the loan from Beck) totaling (=-9600+9000-15000=$15,600) Absorption by the other partners of these losses would be as follows (on a 40:10:20 basis)

Cisneros, who is also insolvent, now has a deficit capital of $4,114.29 that would have to be absorbed by Sadak and Emerson (on a 10:20 basis)

how much cash must Sadak now contribute to this partnership?

Answer $14000