The Pen, Evan, and Torves Partnership has asked you to assist in winding-up its business affairs. You compile the following information: 1. The partnership's trial balance on June 30, 20x1, is Debit $ 7,200 38,000 27,000 98,400 Cash Accounts Receivable (net) Inventory Plant and Equipment (net) Accounts Payable Pen, Capital Evan, Capital Torves, Capital Total $170,600 Profit and loss percentages Preliquidation capital balances 2. The partners share profits and losses as follows: Pen, 50 percent; Evan, 25 percent; and Torves, 25 percent. 3. The partners are considering an offer of $112,000 for the firm's accounts receivable, inventory, and plant and equipment as of June 30. The $112,000 will be paid to creditors and the partners in installments, the number and amounts of which are to be negotiated. Credit Required: Prepare a cash distribution plan as of June 30, 20X1, showing how much cash each partner will receive if the partners accept the offer to sell the assets. Loss absorption potential (capital balances/loss percent) Decrease highest LAP to next highest Decrease LAPs to next highest $ 10,600 67,000 57,000 36,000 $170,600 PET PARTNERSHIP Cash Distribution Plan June 30, 20X1 Loss Absorption Potential Evan Pen Torves Pen Capital Accounts Evan % % Torves
The Pen, Evan, and Torves Partnership has asked you to assist in winding-up its business affairs. You compile the following information: 1. The partnership's trial balance on June 30, 20x1, is Debit $ 7,200 38,000 27,000 98,400 Cash Accounts Receivable (net) Inventory Plant and Equipment (net) Accounts Payable Pen, Capital Evan, Capital Torves, Capital Total $170,600 Profit and loss percentages Preliquidation capital balances 2. The partners share profits and losses as follows: Pen, 50 percent; Evan, 25 percent; and Torves, 25 percent. 3. The partners are considering an offer of $112,000 for the firm's accounts receivable, inventory, and plant and equipment as of June 30. The $112,000 will be paid to creditors and the partners in installments, the number and amounts of which are to be negotiated. Credit Required: Prepare a cash distribution plan as of June 30, 20X1, showing how much cash each partner will receive if the partners accept the offer to sell the assets. Loss absorption potential (capital balances/loss percent) Decrease highest LAP to next highest Decrease LAPs to next highest $ 10,600 67,000 57,000 36,000 $170,600 PET PARTNERSHIP Cash Distribution Plan June 30, 20X1 Loss Absorption Potential Evan Pen Torves Pen Capital Accounts Evan % % Torves
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The Pen, Evan, and Torves Partnership has asked you to assist in winding-up its business affairs. You compile the following information:
1. The partnership's trial balance on June 30, 20X1, is
Cash
Accounts Receivable (net)
Inventory
Plant and Equipment (net)
Accounts Payable
Pen, Capital
Evan, Capital
Torven, Capital
Total
Debit
$ 7,200
38,000
27,000
98,400
Profit and loss percentages
Preliquidation capital balances
$170,600
2. The partners share profits and losses as follows: Pen, 50 percent; Evan, 25 percent; and Torves, 25 percent.
3. The partners are considering an offer of $112,000 for the firm's accounts receivable, inventory, and plant and equipment as of June
30. The $112,000 will be paid to creditors and the partners in installments, the number and amounts of which are to be negotiated.
Decrease LAPs to next highest
Credit
Required:
Prepare a cash distribution plan as of June 30, 20X1, showing how much cash each partner will receive if the partners accept the offer
to sell the assets.
Loss absorption potential (capital balances/loss percent)
Decrease highest LAP to next highest
$ 10,600
67,000
57,000
36,000
$170,600
PET PARTNERSHIP
Cash Distribution Plan
June 30, 20X1
Loss Absorption Potential
Evan
Pen
Torves
Pen
%
Capital Accounts
Evan
%
Torves
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