Due to the Fact That the Partnership Had Been Unprofitable

question 43

Essay

Due to the fact that the partnership had been unprofitable for the past several years, A, B, C, and D decided to liquidate their partnership.The partners share profits and losses in the ratio of 40:30:20:10, respectively.The following balance sheet was prepared immediately before the liquidation process began: $\begin{array}{c} \text {A B C D Partnership}\\ \text {Balance Sheet}\\\\\begin{array}{lll} \text {Cash}&\$100,000\\ \text {Other Assets}&350,000\\\\\\\\ \text {Total Assets}&\$450,000 \end{array}\begin{array}{lll} \text {Liabilities}&\$250,000\\ \text {A, Capital}&55,000\\ \text {B, Capital}&60,000\\ \text {C, Capital}&50,000\\ \text {D, Capital}&35,000\\ \text {Total Lia \& Equities}&\$450,000\end{array}\end{array}$

The personal status of each partner is as follows: $\begin{array}{lrr}&\text { Personal } & \text { Personal } \\&\text { Assets } & \text { Liabilities }\\\text { A } & \$ 165,000 & \$ 120,000 \\\text { B } & 100,000 & 140,000 \\\text { C } & 180,000 & 160,000 \\\text { D } & 60,000 & 70,000\end{array}$
The partnership's other assets are sold for $100,000 cash.The partnership operates in a state which has adopted the Uniform Partnership Act.
Required:
A.Complete the following schedule of partnership realization and liquidation.Assume that a partner makes additional contributions to the partnership when appropriate based on their individual status. $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { OTHER }$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\quad$$\underline{\text { CAPITAL }}$
$\begin{array}{llr}\text { CASH }&\text {ASSETS}&\text { LLABILITIES } & \text { A }&\text { B }&\text { C } & \text { D }\\\$100,000&\$350,000&\$250,000&55,000&66,000&50,000&35,000\\\end{array}$

B.Complete the following schedule to show the total amount that will be paid to the personal creditors. $\begin{array}{ccc}\text { From } & \text { Distribution } & \text { Total Paid } \\\text { Personal } & \text { from } & \text { to Personal }\\\text { Assets}&\text { Partnership}&\text { Creditors }\\\end{array}$
A
B
C
D

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Definitions:

Public Goods

Goods or services that are available to all members of a society, typically provided by the government, with no one excluded from benefitting.

Efficient Mix

The most advantageous combination of goods and services that can be produced and distributed with the available resources and technology, maximizing overall welfare.

Equate Price

The action of setting two or more goods or services to have the same price.

Marginal Cost

The outlay involved in the creation of an additional unit of a good or service.