Apple, Banana, and Pear partnership began the liquidation process with the following balance sheet (profit and loss sharing percentages are in parenthesis): Cash $30,000 Liabilities $150,000 Noncash Assets $400,000 Apple Capital $100,000 (30%) Banana Capital $ 60,000 (20%) Pear Capital $120,000 (50%) A. If the noncash assets are sold for $250,000 what amount of the loss will be allocated to Apple? B. If the noncash assets are sold for only $100,000 which partner(s) capital accounts will be in a deficit balance and require a contribution of assets to the partnership? Answer a and b both, please.
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
- Apple, Banana, and Pear
partnership began the liquidation process with the followingbalance sheet (profit and loss sharing percentages are in parenthesis):
Cash $30,000 Liabilities $150,000
Noncash Assets $400,000 Apple Capital $100,000 (30%)
Banana Capital $ 60,000 (20%)
Pear Capital $120,000 (50%)
A. If the noncash assets are sold for $250,000 what amount of the loss will be allocated to Apple?
B. If the noncash assets are sold for only $100,000 which partner(s) capital accounts will be in a deficit balance and require a contribution of assets to the partnership?
Answer a and b both, please.
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