3)As of January 1, 2018, the partnership of Atlantic, Faucet, and Newton had the following account balances and percentages for the sharing of profits and losses:

Cash

$80,000

Noncash assets

205,000

Liabilities

47,000

Atlantic, capital (30%)

138,000

Faucet, capital (40%)

119,500

Newton, capital (30%)

(19,500)

The partnership incurred losses in recent years and decided to liquidate.The liquidation expenses were expected to be $10,000.

4)How much of the existing cash balance could be distributed safely to partners at this time?

5)What would be the maximum amount Newton might have to contribute to the partnership to eliminate a deficit balance in his account?

Answer:

Atlantic

Faucet

Newton

Total

Capital account balances

Loss on sale of assets

Liquidation expenses

Balances

6)How much cash should each partner receive at this time, pursuant to a proposed schedule of liquidation?

Answer:

Atlantic

Faucet

Newton

Total

Capital account balances

Loss on sale of assets

Liquidation expenses

Balances

Allocation of deficit

Balances

Allocation of deficit

Safe balance