Hardin, Sutton, and Williams have operated a local business as a partnership for several years. All profits and losses have been allocated in a 3:2:1 ratio, respectively. Recently, Williams has undergone personal financial problems, and is insolvent. To satisfy Williams' creditors, the partnership has decided to liquidate. The following balance sheet has been produced: assets CASH 10,000.00 LOAN RECEIVABLE Hardin 20,000.00 NON CAS ASSETS 227,000.00 TOTAL ASETS $257,000.00 LIABILITIES AND CAPITAL Liabilities 80,000.00 Loan payable Sutton n 15,000.00 Hardin, capital 116,000.00 Sutton, capital 30,000.00 Williams, capital 16,000.00 TOTAL LIABILITIES AND CAPITAL $257,000.00 During the liquidation process, the following transactions take place: - Noncash assets are sold for $116,000. - Liquidation expenses of $12,000 are paid. No further expenses are expected. - Safe capital distributions are made to the partners. - Payment is made of all business liabilities. - Any deficit capital account balances are deemed to be uncollectible Required 1. Develop a predistribution plan for this partnership, assuming $12,000 of liquidation expenses are expected to be paid 2. Compute safe cash payments after the noncash assets have been sold and the liquidation expenses have been paid
Hardin, Sutton, and Williams have operated a local business as a
The following
assets
CASH 10,000.00
LOAN RECEIVABLE Hardin 20,000.00
NON CAS ASSETS 227,000.00
TOTAL ASETS $257,000.00
LIABILITIES AND CAPITAL
Liabilities 80,000.00
Loan payable Sutton n 15,000.00
Hardin, capital 116,000.00
Sutton, capital 30,000.00
Williams, capital 16,000.00
TOTAL LIABILITIES AND CAPITAL $257,000.00
During the liquidation process, the following transactions take place:
- Noncash assets are sold for $116,000.
- Liquidation expenses of $12,000 are paid. No further expenses are expected.
- Safe capital distributions are made to the partners.
- Payment is made of all business liabilities.
- Any deficit capital account balances are deemed to be uncollectible
Required
1. Develop a predistribution plan for this partnership, assuming $12,000 of liquidation expenses are expected to be paid
2. Compute safe cash payments after the noncash assets have been sold and the liquidation expenses have been paid
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