One of your colleagues has been hired by the Kim, Ozkan, and Samuels partnership to guide it
Question:
One of your colleagues has been hired by the Kim, Ozkan, and Samuels partnership to guide it through the liquidation process. The partnership currently has cash in a bank account that exceeds the amount it owes creditors, and has other assets consisting of equipment, land, and a building. Each partner has a positive balance in their capital account. Your colleague has asked your opinion with respect to two questions:
(1) Would it be appropriate to distribute some cash to the partners even before the other assets have been sold and creditors have been paid, and if so,
(2) Should each partner receive an equal amount of cash?
Required
Write a memorandum to your colleague providing your opinion with regard to questions (1) and (2).
Step by Step Answer:
Advanced Accounting
ISBN: 9781264798483
15th Edition
Authors: Joe Ben Hoyle, Thomas Schaefer And Timothy Doupnik