Hardin, Sutton, and Williams Have Operated a Local Business as a Partnership

question 63

Essay

Hardin, Sutton, and Williams have operated a local business as a partnership for several years. All profits and losses have been allocated in a 3:2:1 ratio, respectively. Recently, Williams has undergone personal financial problems, and is insolvent. To satisfy Williams' creditors, the partnership has decided to liquidate.The following balance sheet has been produced:
During the liquidation process, the following transactions take place:- Noncash assets are sold for $116,000.- Liquidation expenses of $12,000 are paid. No further expenses are expected.- Safe capital distributions are made to the partners.- Payment is made of all business liabilities.- Any deficit capital account balances are deemed to be uncollectible.Develop a predistribution plan for this partnership, assuming $12,000 of liquidation expenses are expected to be paid.

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Definitions:

Control Theory

A theory in psychology and sociology that examines how external rules, regulations, and feedback mechanisms influence behavior and social order.

Physical Survival Needs

Basic necessities required for human survival, including food, water, shelter, and clothing.

Glasser

Refers to William Glasser, an American psychiatrist who developed the theories of Reality Therapy and Choice Theory.

Authentic

Being genuine or true to one's self, values, and beliefs in one's actions and interactions.