David, Paul, and Burt Are Partners in a CPA Firm

question 26

Essay

David, Paul, and Burt are partners in a CPA firm sharing profits and losses in a ratio of 2:2:3, respectively.Immediately prior to liquidation, the following balance sheet was prepared: $$\begin{array} { l c l r } { \text { Assets } } & & { \text { Liabilities \& Equities } } & \\\text { Cash } & \$ 100,000 & \text { Liabilities } & \$ 280,000 \\\text { Noncash assets } & 580,000 & \text { David, Capital } & 160,000 \\& & \text { Paul, Capital } & 160,000 \\& & \text { Burt, Capital } &80,000\\ \text {Total Assets}&\$ 680.000 & \text {Total Liabilities \& Equities}&\$ 680,000 \end{array}$$
Required:
Assuming the noncash assets are sold for $300,000, determine the amount of cash to be distributed to each partner.Complete the worksheet and clearly indicate the amount of cash to be distributed to each partner in the spaces provided.No cash is available from any of the three partners. $\begin{array}{lcccccc}&&\text { Noncash } &&\text { David } &\text { Paul } & \text { Burt }\\&\text{Cash} & \text { Assets }& \text { Liabilities } &\text { Capital }&\text { Capital }&\text { Capital }\\\text { Beginning Bal. }&100,000&580,000&280,000&160,000&160,000&80,000\end{array}$

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Definitions:

Dissolution

The formal disbanding of a partnership or a corporation.

Multiple Times

Occurring or being done many times.

Certain Age

A specific point in time or stage of life that is significant legally, culturally, or socially, often referencing eligibility for certain rights, responsibilities, or benefits.

Unmarried

The state of not being legally joined to another person in a marriage.