The Abrams, Bartle, and Creighton partnership began the process of liquidation with the following balance sheet:

Cash 16,000

Noncash asset 434,000

Total - 450,000

Liability-150000

Abrams-80,000

Bartle - 90,000

Creighton-130,000

total - 450,000

Abrams, Bartle, and Creighton share profits and losses in a ratio of 3:2:5. Liquidation expenses are expected to be $12,000.

The noncash assets were sold for $134,000. Which partner (s) would have had to contribute assets to the partnership to cover a deficit in his or her capital account, prior to considering the liquidation expenses incurred?

Question

Business

Patrick Fuller

14 November, 22:56

The Abrams, Bartle, and Creighton partnership began the process of liquidation with the following balance sheet:

Cash 16,000

Noncash asset 434,000

Total - 450,000

Liability-150000

Abrams-80,000

Bartle - 90,000

Creighton-130,000

total - 450,000

Abrams, Bartle, and Creighton share profits and losses in a ratio of 3:2:5. Liquidation expenses are expected to be $12,000.

The noncash assets were sold for $134,000. Which partner (s) would have had to contribute assets to the partnership to cover a deficit in his or her capital account, prior to considering the liquidation expenses incurred?

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Answers (1)

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Dante Kaufman · Answer 1

Answer and Explanation:

The contribution of assets to the partnership to cover a deficit is presented below:

Particulars Abram Bartle Creighton

Capital Balance $80,000 $90,000 $130,000

Less:

Allocation of non cash assets sold ($434,000 - $134,000) = $300,000 in 3 : 2 : 5 ratio

-$90,000 - $60,000 - $150,000

Liquidation expense - $3,600 - $2,400 - $6,000

Liabilities ($150,000 - $16,000) = $134,000 in 3 : 2 : 5 ratio

-$40,200 -.$26,800 - $67,000

Adjusted capital balance - $53,800 $800 - $93,000

So based on the above calculation the Abram and Creighton have to contribute the assets