E16-4

O Partnership Liquidation-Safe Payment Approach Lo4 Following is the balance sheet of the BDO Partnership: EXERCISE 16-5 Cash $ 10,000 40,000 30,000 Liabilities Brink, Capital Davis, Capital Olsen, Capital s 18,000 45,000 27,000 Accounts Receivable Inventory Equipment $140,00 The partners share income 40:40:20, respectively. Assume that 70% of the receivables are collected and that inventory with a book value of $15,000 is sold for $10,000. All cash available at this time is to be distributed. Required: Determine the proper distribution of cash, using the safe payment approach a schedule to estimate the amount of cash each EXERCISE 16.4 Cash Distribution Schedule Lo@) The ABC Partnership is in the process of liquidation. The account balances prior to liquidation are given Debits Cash Amos, Drawing Boone, Drawing Childs, Drawing Operating Loss Liquidation Loss s 72,000 10,000 15,000 Liabilities Boone, Loan Childs, Loan Amos, Capital Boone, Capital Childs, Capital S 40,000 25,000 49,000 20,000 21,000 12,000 18,000 The partners share profits in the following ratio: Amos, 1/5: Boone, /5: Childs, 2/5. Required Prepare a schedule showing the calculations of the distribution of cash under the Uniform Partnership Act, assuming that all three partners have personal liabilities in excess of their personal assets. EXERCISE 16-5 Partnership Liquidation-Safe Payment Approach Lo4 Following is the balance sheet of the BDO Partnership: Cash Accounts Receivable s 10,000 40,000 30,000 s 18,000 45,000 27,000 Inventory Equipment Davis, Capital Olsen, Capital $140.000 $140,000 The partners share income 40:40:20, respectively. Assume that 70% of the receivables are collected and that inventory with a book value of $15,000 is sold for $10,000. All cash available at this time is to be distributed Required Determine the proper distribution of cash, using the safe payment approach. Partnership Liquidation with Personal Asset Information Pete, Tom, and Zack have operated a laundromat for 10 years. The partners, who share profits 4:3:3, respectively. decide to liquidate the partnership. The firm's balance sheet just before the partners sell the other assets for $30,000 is as follows: EXERCISE 16-6 Assets S 42,000