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
|