Problem

Lump-Sum LiquidationThe Carlos, Dan, and Gail (CDG) Partnership has decided to liquidate a...

Lump-Sum Liquidation

The Carlos, Dan, and Gail (CDG) Partnership has decided to liquidate as of December 1, 20X6. A balance sheet as of December 1, 20X6, appears below:

CDG PARTNERSHIP

Balance Sheet

At December 1, 20X6

Assets

 

 

Cash

 

$ 25,000

Accounts Receivable (net)

 

75,000

Inventories

 

100,000

Property, Plant, and Equipment (net)

 

300,000

Total Assets

 

$500,000

Liabilities and Capital

 

 

Liabilities:

 

 

   Accounts Payable

 

$270,000

Capital:

 

 

   Carlos, Capital

$120,000

 

   Dan, Capital

50,000

 

   Gail, Capital

    60,000

 

Total Capital

 

  230,000

Total Liabilities and Capital

 

$500,000

Additional Information

1. The personal assets (excluding partnership capital interests) and personal liabilities of each partner as of December 1, 20X6, follow:

 

Carlos

Dan

Gail

Personal assets

$250,000

$300,000

$350,000

Personal liabilities

(230,000)

(240,000)

(325,000)

Personal net worth

$ 20,000

$ 60,000

$ 25,000


2. Carlos, Dan, and Gail share profits and losses in the ratio 20:40:40.


3. All of the noncash assets were sold on December 10, 20X6, for $260,000.

Required

a. Prepare a statement of realization and liquidation for the CDG Partnership on December 10, 20X6.

b. Prepare a schedule of the net worth of each of the three partners as of December 10,2006, after the liquidation of the partnership is completed.

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