Question

The Abrams, Bartle, and Creighton partnership began the process of liquidation with the following balance sheet: Picture Abrams, Bartle, and Creighton share profits and losses in a ratio of 3:2:5. Liquidation expenses are expected to be $12,000. The noncash assets were sold for $134,000. Which partner(s) would have had to contribute assets to the partnership to cover a deficit in his or her capital account

Answer 1

Answer:

After considering liquidation costs, Abrams must contribute $13,600 and Creighton must contribute $26,000.

Explanation:

the balance sheet was missing, so I looked for it:

• Cash 16,000
• Noncash asset 434,000
• Total- 450,000

• Liability-150000
• Abrams-80,000
• Bartle- 90,000
• Creighton-130,000
• total- 450,000

non-cash assets were sold for $134,000, so the loss on the sale of non-cash assets = $434,000 - $134,000 = $300,000

allocation of loss:

Abrams: 90,000

Bartle: 60,000

Creighton: 150,000

allocation of liquidation expenses:

Abrams: 3,600

Bartle: 2,400

Creighton: 6,000

capital accounts:

Abrams = 80,000  - 90,000 - 3,600 = -13,600

Bartle = 90,000  - 60,000 - 2,400 = 27,600

Creighton = 130,000  - 150,000 - 6,000 = -26,000