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  • Mar 25, 2007, 01:00 AM
    Ail Bane
    1 Attachment(s)
    Parntership Liquidation
    I've been pulling my hair out trying to do this liquidation problem.
    I did it in a spreadsheet but since I can upload excel files, I hosted a picture of it.
    My answers were from 15,000 to 27,000 but I doubt that's even close.
  • Mar 25, 2007, 01:42 PM
    CaptainForest
    They had assets of:
    Cash 25,000
    Non Cash assets of 14,000 (as that is what they sold the 74K for)

    Total 39,000

    That leaves 11,000 left.

    The payment of that goes

    2 James: 1 Sonia: 1 Erica

    11,000 / 4 = 2,750

    Therefore, Erica and Sonia each pat 2,750 for the shortfall where James pays 5,500


    Not sure if that is correct or what, I might have misinterpreted what “noncash assets were sold at $14,000”.

    Now I am doubting myself because how can there be any cash left in the business?

    Unless….

    Each partner paid their portion of the 50,000 liability.

    So,
    James paid 50,000/4*2 = $25,000
    And Sonia and Erica each paid $12,500

    Then they go to divide the cash of 25,000 + 14,000 = 39,000
    So James gets 39,000/4*2 = $19,500
    And Sonia and Eric each get $9,750

    That still gives the same result as above though:
    James = 19,500 – 25,000 = -5,500
    Sonia = 9,750 – 12,500 = -2,750
    Erica = 9,750 – 12,500 = -2,750
  • Mar 25, 2007, 02:45 PM
    Ail Bane
    I think that the noncash assets statement could be interpreted as "sold for $14,000”. I think it's the same thing but I noticed that's the term Acct books used.
    Thanks for the explanation. Accounting isn't that much of a pain, but its just the book only has a one page example on liquidation. The Fundamental Accounting Principles book sucks.
    This is what I used to guide me.
    Liquidation of a partnership = termination

    So all the partners were in the red? Damn, I'm worse at acct than I thought.

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