Question
Merz, Dechter, and Flowers are partners in a partnership and share profits and losses 40%, 40%, and 20%, respectively. The partners have agreed to liquidate
Merz, Dechter, and Flowers are partners in a partnership and share profits and losses 40%, 40%, and 20%, respectively. The partners have agreed to liquidate the partnership and anticipate that liquidation expenses will total $14,000. Prior to the liquidation, the partnership balance sheet reflects the following book values:
Cash | $ 25,000 |
Noncash assets | 200,000 |
Note payable to Dechter | 12,000 |
Other liabilities | 165,000 |
Capital, Merz | 40,000 |
Capital Dechter | 18,000 |
Capital deficit, Flowers | (10,000) |
Required:
Assuming that the actual liquidation expenses are $20,000 and that noncash assets are sold for $160,000, determine how the assets will be distributed. Flowers has net personal assets of $10,000.
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