Following is a series of independent cases. In each situation, indicate the cash distribution to be made to partners at the end of the liquidation process. Unless otherwise stated, assume that all solvent partners will reimburse the partnership for their deficit capital balances.Part AThe Buarque, Monte, and Vinicius partnership reports the following accounts. Vinicius is personally insolvent and can contribute only an additional $9,000 to the partnership. Cash . . . . . . . . . . . . . . . . .. . $ 130,000Liabilities . . . . . . . . . . . . . .. . . 35,000Monte, loan . . . . . . . . . . . . . . . 20,000Buarque, capital (50% of profits and losses) . . . . . . . . . . . . . . 50,000Monte, capital (25%) . . . . . 40,000Vinicius, capital (25%) . . . . . . . . . . . . . . . . . . . . . . . . . (15,000) (deficit) Part BDrawdy, Langston, and Pearl operate a local accounting firm as a partnership. After working together for several years, they have decided to liquidate the partnership’s property. The partners have prepared the following balances: Cash . . . . . . . . . . . . . . . . . . . $ 20,000 Liabilities . . . . . . . . . . . . . . . $ 40,000Drawdy, loan . . . . . . . . . . . . 5,000 Langston, loan . . . . . . . . . . . . . . . 8,000Noncash assets . . . . . . . . . 150,000 Drawdy, capital (40%) . . . . . . . . . 65,000Langston, capital (30%) . . . . . 50,000Pearl, capital (30%) . . . . . . . .. 12,000 The firm sells the noncash assets for $120,000; it will use $15,000 of this amount to pay liquidation expenses. All three of these partners are personally insolvent.Part CUse the same information as in Part B, but assume that the profits and losses are split 2:4:4 to Drawdy, Langston, and Pearl, respectively, and that liquidation expenses are only $6,000.Part DFollowing the liquidation of all noncash assets, the partnership of Krups, Lindau, Riedel, and Schnee has the following account balances. Krups is personally insolvent.
Following is a series of independent cases. In each situation, indicate the cash distribution to be made to partners at the end of the liquidation process. Unless otherwise stated, assume that all solvent partners will reimburse the
Part A
The Buarque, Monte, and Vinicius partnership reports the following accounts. Vinicius is personally insolvent and can contribute only an additional $9,000 to the partnership.
Cash . . . . . . . . . . . . . . . . .. . $ 130,000
Liabilities . . . . . . . . . . . . . .. . . 35,000
Monte, loan . . . . . . . . . . . . . . . 20,000
Buarque, capital (50% of
Monte, capital (25%) . . . . . 40,000
Vinicius, capital (25%) . . . . . . . . . . . . . . . . . . . . . . . . . (15,000) (deficit)
Part B
Drawdy, Langston, and Pearl operate a local accounting firm as a partnership. After working together for several years, they have decided to liquidate the partnership’s property. The partners have prepared the following balances:
Cash . . . . . . . . . . . . . . . . . . . $ 20,000 Liabilities . . . . . . . . . . . . . . . $ 40,000
Drawdy, loan . . . . . . . . . . . . 5,000 Langston, loan . . . . . . . . . . . . . . . 8,000
Noncash assets . . . . . . . . . 150,000 Drawdy, capital (40%) . . . . . . . . . 65,000
Langston, capital (30%) . . . . . 50,000
Pearl, capital (30%) . . . . . . . .. 12,000
The firm sells the noncash assets for $120,000; it will use $15,000 of this amount to pay liquidation expenses. All three of these partners are personally insolvent.
Part C
Use the same information as in Part B, but assume that the profits and losses are split 2:4:4 to Drawdy, Langston, and Pearl, respectively, and that liquidation expenses are only $6,000.
Part D
Following the liquidation of all noncash assets, the partnership of Krups, Lindau, Riedel, and Schnee has the following account balances. Krups is personally insolvent.
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