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3 October, 09:49

Prior to liquidating their partnership, Joyce and Xi had capital accounts of $50,000 and $105,000, respectively. Prior to liquidation, the partnership had no cash assets other than what was realized from the sale of assets. These partnership assets were sold for $190,000. The partnership had $10,000 of liabilities. Joyce and Xi share income and losses equally.

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  1. 3 October, 11:22
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    Joyce cash distribution = $262500

    Explanation:

    given data

    Joyce capital = $50,000

    Xi capital = $105,000

    liabilities = $10,000

    assets sold = $190,000

    to find out

    we consider Determine the amount received by Joyce as a final distribution from liquidation of the partnership

    solution

    we carrying value of non-cash asset prior to liquidation is

    value of non-cash asset prior to liquidation = $50,0000 + $105,000 + $10,000

    value of non-cash asset prior to liquidation = $615000

    so Profit on Liquidation is = value of non-cash asset prior to liquidation - Sale of Asset

    Profit on Liquidation is = $615000 - $190,000

    Profit on Liquidation is = $ 425000

    and here since

    Joyce and Xi share income and losses equally

    so Joyce share of profit will be

    Joyce share of profit = 50% * $ 425000

    Joyce share of profit = $212500

    and

    so Joyce cash distribution will be

    Joyce cash distribution = Joyce share of profit + Joyce capital

    Joyce cash distribution = $212500 + $50,000

    Joyce cash distribution = $262500
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