Ask Experts Questions for FREE Help !
Ask
    Ail Bane's Avatar
    Ail Bane Posts: 25, Reputation: 1
    New Member
     
    #1

    Mar 25, 2007, 01:00 AM
    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.
    Attached Images
     
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
    Ultra Member
     
    #2

    Mar 25, 2007, 01:42 PM
    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
    Ail Bane's Avatar
    Ail Bane Posts: 25, Reputation: 1
    New Member
     
    #3

    Mar 25, 2007, 02:45 PM
    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.

Not your question? Ask your question View similar questions

 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Dissolution of a Partnership by Liquidation [ 3 Answers ]

Hey can anyone help on the this question? Please The following balance sheet information is given for the Snowbird partnership: Snowbird Partnership Balance Sheet Cash 8 000 l Liabilities 22 000...


View more questions Search