2. The following balance sheet is for a local partnership in which the partners have become very unhappy with each other.

Land - 130,000 Adams, Capital - 80,000

Building - 120,000 Baker, Capital - 30,000

Total Assets - 290,000 Carvil, Capital - 60,000

Dobbs,Capital - 90,000

Total Liab & Cap - 290,000

To avoid more conflict, the partners have decided to cease operations and sell all assets. Using this information, answer the following questions. Each question should be viewed as an independent situation related to the partnerships liquidation. a. The $ 10,000 cash that exceeds the partnership liabilities is to be disbursed immediately. If profits and losses are allocated to Adams, Baker, Carvil, and Dobbs on a 2: 3: 3: 2 basis, respectively, how will the $ 10,000 be divided? b. The $ 10,000 cash that exceeds the partnership liabilities is to be disbursed immediately. If profits and losses are allocated on a 2: 2: 3: 3 basis, respectively, how will the $ 10,000 be divided? Show your work

Requirement A:

Since the partnership currently has total capital of $260,000, the $10,000 that is available

would indicate maximum potential losses of $250,000.

Reported Balances

Assumed $250,000 loss (2:3:3:2)

Potential balances

Potential loss from deficits (1:1)

Current cash distribution

Requirement B:

Same cash to distribute, different allocations:

Reported Balances
Assumed $250,000 loss (2:2:3:3)
Potential balances, Step 1
Potential loss from deficits (4:6)
Potential balances, Step 2
Potential loss from deficit (100%)
Current cash distribution