A partnership is considering possible liquidation because one of the partners (Bell) is personally insolvent. Profits and losses are divided on a 4:3:2:1 basis, respectively. Capital balances at the current time are Bell's creditors have filed a $43,000 claim against the partnership's assets. The partnership currently holds assets of $520,000 and liabilities of $209,000. An independent appraiser indicates that the assets can be sold for $300,000. Required:Prepare a statement of partnership liquidation to determine the amount of cash that Bell would receive from the sale of partnershipassets.Note: Amounts to be deducted should be entered with a minus sign.BELL, HARDY, DENNARD, AND SUDDATH PARTNERSHIPStatement of Partnership Liquidation (Hypothetical)CashAssetsLiabilitiesBell, Capital40%Hardy, Capital30%Dennard,Capital 20%Suddath,Capital 10%Balances$106,000 $91,000 $12,000 $102,000Sale of assetsSubtotal$106,00091,00012,000102,000000Pay liabilitiesSubtotal$106,000 $91,000 $12,000 $102,000 $0 $0 $0Allocate deficitSubtotal$106,000 $91,000 $12,000 $102,000 $0$0 $0Distribute cashEnding balances$ 106,000 $91,000 $12,000 $102,000 $0 $0 $0

The calculation of the net assets that are available for distribution and the determination of the…

Answered: Required: Prepare a statement of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A partnership is considering possible liquidation because one of the partners (Bell) is personally insolvent. Profits and losses are divided on a 4:3:2:1 basis, respectively. Capital balances at the current time are Bell's creditors have filed a $43,000 claim against the partnership's assets. The partnership currently holds assets of $520,000 and liabilities of $209,000. An independent appraiser indicates that the assets can be sold for $300,000.

Required:
Prepare a statement of partnership liquidation to determine the amount of cash that Bell would receive from the sale of partnership
assets.
Note: Amounts to be deducted should be entered with a minus sign.
BELL, HARDY, DENNARD, AND SUDDATH PARTNERSHIP
Statement of Partnership Liquidation (Hypothetical)
Cash
Assets
Liabilities
Bell, Capital
40%
Hardy, Capital
30%
Dennard,
Capital 20%
Suddath,
Capital 10%
Balances
$
106,000 $
91,000 $
12,000 $
102,000
Sale of assets
Subtotal
$
106,000
91,000
12,000
102,000
0
0
0
Pay liabilities
Subtotal
$
106,000 $
91,000 $
12,000 $
102,000 $
0 $
0 $
0
Allocate deficit
Subtotal
$
106,000 $
91,000 $
12,000 $
102,000 $
0
$
0 $
0
Distribute cash
Ending balances
$ 106,000 $
91,000 $
12,000 $
102,000 $
0 $
0 $
0

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement 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, and drawings of a partner.

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