The following balance sheet is for a local partnership in which the partners have become very unhappy with each other. Cash $ 40,000 Liabilities $ 30,000 Land 130,000 Adams, capital 80,000 Building 120,000 Baker, capital 30,000 Carvil, capital 60,000 Dobbs, capital 90,000 Total assets $ 290,000 Total liabilities and capital $ 290,000 To avoid more conflict, the partners have decided to cease operations and sell all assets. Using this information, answer the following questions. Each question should be viewed as an independent situation related to the partnership’s liquidation. Assume that profits and losses are allocated to Adams, Baker, Carvil, and Dobbs on a 1:3:4:2 basis, respectively. How much money must the firm receive from selling the land and building to ensure that Carvil receives a portion? (Do not round intermediate calculations.)
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.
The following
| Cash | $ | 40,000 | Liabilities | $ | 30,000 | |
| Land | 130,000 | Adams, capital | 80,000 | |||
| Building | 120,000 | Baker, capital | 30,000 | |||
| Carvil, capital | 60,000 | |||||
| Dobbs, capital | 90,000 | |||||
| Total assets | $ | 290,000 | Total liabilities and capital | $ | 290,000 | |
To avoid more conflict, the partners have decided to cease operations and sell all assets. Using this information, answer the following questions. Each question should be viewed as an independent situation related to the partnership’s liquidation.
Assume that
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 4 images
