The partnership of anderson, berry, hammond, and winwood is being liquidated. it currently holds cash of $20,000 but no other assets. liabilities amount to $30,000. the capital balances are

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Business

Shiloh Brennan

17 July, 19:17

The partnership of anderson, berry, hammond, and winwood is being liquidated. it currently holds cash of $20,000 but no other assets. liabilities amount to $30,000. the capital balances are

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Geovanni Owens · Answer 1

The company has no capital balance. On the contrary, it has - $10, 000 in debt since the amount in liability exceeds its cash after liquidation. Liquidation by its very meaning implies bankruptcy (the company can no longer meet its financial obligation). I'm saying that If the company is being liquated and has no other asset beside its $20, 000 and if the company has to pay $30, 000 in debt. This is pretty intitutive, isn't It?