Prepare a cash distribution plan.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Stewardship Enterprises, a partnership , is about to begin liquidation. The process for selling the company’s assets will occur over time, but the partners would like to receive cash distributions as asset sales occur. The company’s books show total assets of $1 million, which includes a Note Receivable of $32,000 from partner Jones. Income allocations are 4:1:5 and existing partnership capital balances are: Jones $200,000; Smith $100,000; and Holt $90,000.
Required:
Prepare a cash distribution plan.
Expert Solution
Step 1
To prepare a cash distribution plan, we need to first calculate the amount of cash that will be available for distribution to the partners.
Total Assets = $1,000,000
Total Liabilities = Not given
Therefore, the amount of cash available for distribution is $1,000,000. (1,000,000 - 0)
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