Question
1. ABC Partnership engaged in real estate business had the following condensed statement of financial position prior to liquidation. The percentages in the parenthesis are
1. ABC Partnership engaged in real estate business had the following condensed statement of financial position prior to liquidation. The percentages in the parenthesis are their profit and loss ratio.
Cash 12,000
Accounts payable 35,000
Non-cash assets 180,000
Loan payable to A 15,000
Total 192,000
A, Capital (50%) 45,000
B, Capital (30%) 65,000
C, Capital (20%) 32,000
Total 192,000
The non-cash assets were sold as follows:
Book Value Selling Price
1st month of liquidation 70,000 50,000
2nd month of liquidation 60,000 45,000
3rd month of liquidation 50,000 40,000
1. If all available cash were distributed and using the safe payment schedule, how much will each partner receive in the first month of liquidation?
a. A 5,000 B 16,000 C 6,000
b. A 5,000 B 18,000 C 4,000
c. A 0 B 23,000 C 4,000
d. A 0 B 21,000 C 6,000
2. Assume that no cash was distributed to the partners in the first month of liquidation but the accounts payable were paid in full. All the available cash is distributed in second month and using the schedule of safe payments, how much will each partner receive in the second month of liquidation?
a. A 17,500 B 54,500 C 0
b. A 17,500 B 39,500 C 15,000
c. A 25,000 B 32,000 C 15,000
d. A 25,000 B 25,000 C 22,000
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