The ALPHA, BETA, AND DELTA Partnership Has Total Assets of $260,000

question 2

Essay

The ALPHA, BETA, AND DELTA partnership has total assets of $260,000. Capital balances for partners ALPHA, BETA, and DELTA are $50,000, $30,000, and $50,000, respectively. The profit/loss percentages for partners ALPHA, BETA, and DELTA are 30%, 40%, and 30%, respectively. Included in the liabilities is a $9,000 loan payable to ALPHA. The partnership has elected to liquidate over the next several months. Liquidation expenses are estimated to be $15,000.
Required:
Assuming assets with a book value of $80,000 were sold for $60,000, and that $160,000 cash is available, how should the available cash be distributed?

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Definitions:

Net Income

The company's residual income following the deduction of all expenses and taxes from its total revenue.

Cash Flow

A financial metric that measures the net amount of cash and cash equivalents being transferred into and out of a business.

Operating Activities

Financial transactions and events that affect the operational aspect of a company, including cash flows from operations.

Inventory

The goods and materials a business holds for the ultimate goal of resale, production, or utilisation in the service of manufacturing or providing services.