Question
A balance sheet for the partnership of Paul, Ceres and Nava who share profits in the ratio of 2:1:1 shows the following balances just before
A balance sheet for the partnership of Paul, Ceres and Nava who share profits in the ratio of 2:1:1 shows the following balances just before liquidation:
Cash 12,000
Liabilities 20,000
Other assets 59,500
Total 71,500
Paul, Capital 22,000
Ceres, Capital 15,500
Nava, Capital 14,000
Total 71,500
On the first month of the liquidation, certain assets are sold for 32,000. Liquidation expenses of 1,000 are paid and additional liquidation expenses are anticipated. Liabilities are paid amounting to 5,400 and sufficient cash is retained to ensure the payment to creditors before making payments to partners. On the first payments to partners, Paul receives 6,250.
Compute
(1) The total cash distributed to the partners in the first installment and
(2) The amount of cash withheld for anticipated liquidation expenses and unpaid liabilities.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started