Question
The partnership of Susan, Tim, James, and Michelle was formed several years ago as a law firm. Several partners have undergone personal financial problems and
The partnership of Susan, Tim, James, and Michelle was formed several years ago as a law firm. Several partners have undergone personal financial problems and have decided to terminate operations and liquidate the business. The following balance sheet is drawn up as a guideline for this process:
| Assets |
|
| Liabilities and Capital |
|
|
| Cash | $ | 33,000 | Liabilities | $ | 70,000 |
| Accounts receivable |
| 100,000 | James, loan |
| 53,000 |
| Inventory |
| 119,000 | Susan, capital (30%) |
| 147,000 |
| Land |
| 94,000 | Tim, capital (10%) |
| 106,000 |
| Building and equipment (net) |
| 177,000 | James, capital (20%) |
| 83,000 |
|
|
|
| Michelle, capital (40%) |
| 64,000 |
| Total assets | $ | 523,000 | Total liabilities and capital | $ | 523,000 |
When the liquidation commenced, liquidation expenses of $15,000 were anticipated as being necessary to dispose of all property.
Required:
Prepare a pre-distribution plan for this partnership
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Precalculus
Authors: Michael Sullivan
9th edition
321716835, 321716833, 978-0321716835
