Question
Dewey, Cheatham, & Howe plan to liquidate their partnership. The condensed balance sheet for the partnership is as follows: Assets Liabilities & Capital Cash $20,000
Dewey, Cheatham, & Howe plan to liquidate their partnership. The condensed balance sheet for the partnership is as follows:
Assets | Liabilities & Capital | |||
Cash | $20,000 | Accounts Payable | $92,000 | |
Receivables (net) | 88,000 | Loan Payable to Partner A | 70,000 | |
Inventory | 70,000 | Dewey, Capital | 46,000 | |
Equipment (net) | 145,000 | Cheatham, Capital | 90,000 | |
Other Assets | 55,000 | Howe, Capital | 80,000 | |
Total Assets | $378,000 | Total Liabilities & Capital | $378,000 |
The profit and loss percentages for Dewey, Cheatham, and Howe are 50%, 30%, and 20%, respectively. This scenario is completely independent of the prior question. Determine how much of the available cash, with the exception of $10,000, would be distributed to Cheatham, assuming that the noncash assets with a book value of $300,000 were sold for $250,000 cash, the remaining noncash assets were liquidated at the maximum loss possible, and that a distribution to Dewey was made in order to pay off the loan payable.
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