Question

A partnership has liquidated all assets but still reports the following account balances: $ Beck, loan Cisneros, capital (40%) Beck, capital (20%) Sadak, Capital (10%) Emerson, Capital (20%) Page, capital (18x) 8.5ee 4,500 (9,580) (deficit) (10,380) (deficit) 16,100 (8,380) (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.) Sadak contribution

Answer 1

Here two partners Beck and got personally insolvent and have negetive capital after adjusted with their loan. Hence their deficit i.e, (9500-8500+8300) = $9,300 will be adjusted with Remaining partner in the ratio of 40:10:20 respectively Cisneros Sadak Emerson Current Capital Share of loss Adjusted Capital 4,500.00 $9,300 x 40 / 70 = $5,314.29 $ -814.29 -10,300.00 $9,300 x 10 / 70 = $1,329.57 $ -11,629.57 $ 16,100.00 $9,300 x 20 / 70 = $2,657.14 $ 13,442.86 Cisneros, who also is personally insolvent, now has a capital deficit of 814. Hence it will have to be absorbed by Sadak and Emerson in the ratio of 10:20 respectively Adjusted Current Partner Capital Share of loss Adjusted Capital Sadak $ -11,629.57 $814.29 x 10/30 = $271.43 $ -11,901.00 Emerson $ 13,442.86 $814.29 x 20 / 30 = $543.87 $ 12,900.00 Sadak Contribution $ 11,901.00