Chapter 14, Problem 6E

  $1.$

To determine

Concept introduction

Partnership liquidation

A procedure of paying off all the liabilities of the partnership firm, selling out all the respective assets of the partnership firm and then distribution of the remaining assets and the cash when the partnership business is going out of the business is known as partnership liquidation.

To prepare: The amount of the available cash distributed to partner B when the receivables and the inventory were liquidated for $\$140,000$ cash.

Answer to Problem 6E

The amount of available cash available for the distribution to the partner B is $\$21,600$

Explanation of Solution

Details	cash $(\$)$	Noncash assets $(\$)$	Liabilities $(\$)$	Loan from A $(\$)$	A $(50\%)$$(\$)$	B $(50\%)$$(\$)$	C $(50\%)$$(\$)$
Starting balance	$20,000$	$358,000$	$92,000$	$70,000$	$46,000$	$90,000$	$80,000$
Liquidation of receivables and inventory	$140,000$	$(158,000)$			$(9,000)$	$(5,400)$	$(3,600)$
Liabilities due	$(92,000)$		$(92,000)$
Remaining noncash assets loss		$(200,000)$			$(100,000)$	$(60,000)$	$(40,000)$
$\$10,000$ cash retained	$(10,000)$				$(5,000)$	$(3,000)$	$(2,000)$
balance	$58,000$			$70,000$	$(68,000)$	$21,600$	$34,400$

  $2.$

To determine

Concept introduction

Partnership liquidation

A procedure of paying off all the liabilities of the partnership firm, selling out all the respective assets of the partnership firm and then the distribution of the remaining assets and the cash when the partnership business is going out of the business is known as partnership liquidation.

To prepare: The amount of the available cash distributed to partner B when all the non-cash assets other than equipment were sold for $\$53,000$ cash

Answer to Problem 6E

There is no amount of available cash available for the distribution to the partner B.

Explanation of Solution

Details $(\$)$	Cash $(\$)$	Noncash asset $(\$)$	Liabilities $(\$)$	Loan from A $(\$)$	A $(50\%)$$(\$)$	B $(30\%)$$(\$)$	C $(20\%)$$(\$)$
Initial balance	$20,000$	$358,000$	$92,000$	$70,000$	$46,000$	$90,000$	$80,000$
Sale of non-cash assets	$53,000$	$(213,000)$			$(80,000)$	$(48,000)$	$(32,000)$
Payment of liabilities	$(92,000)$	$$	$(92,000)$
Amount		$(145,000)$			$(72,500)$	$(43,500)$	$(29,000)$
Retain cash of $\$10,000$	$(10,000)$				$(5,000)$	$(3,000)$	$(2,000)$
balances	$(29,000)$			$70,000$	$(111,500)$	$(4,500)$	$17,000$

  $3.$

To determine

Concept introduction

Partnership liquidation

A procedure of paying off all the liabilities of the partnership firm, selling out all the respective assets of the partnership firm and then the distribution of the remaining assets and the cash when the partnership business is going out of the business is known as partnership liquidation.

To prepare: The amount of the available cash distributed to partner B when non-cash assets with a book value $\$300,000$ were sold for $\$250,000$ cash and that a distribution to partner A was made in order to pay off the loan payable to them.

Answer to Problem 6E

The amount of available cash that would be distributed to partner B is $\$46,800$.

Explanation of Solution

details	Cash $(\$)$	Noncash assets $(\$)$	Liabilities $(\$)$	Loan from A $(\$)$	A $(50\%)$$(\$)$	B $(30\%)$$(\$)$	C $(20\%)$$(\$)$
Initial balance	$20,000$	$358,000$	$92,000$	$70,000$	$46,000$	$90,000$	$80,000$
Sale of noncash asset	$250,000$	$(300,000)$			$(25,000)$	$(15,000)$	$(10,000)$
Payment of liability	$(92,000)$		$(92,000)$
Payment of loan from A	$(70,000)$			$(70,000)$
The maximum loan on remaining noncash asset		$(58,000)$			$(29,000)$	$(17,400)$	$(11,600)$
Retain cash of $\$10,000$	$(10,000)$				$(5,000)$	$(3,000)$	$(2,000)$
Balance	$98,000$				$(13,000)$	$54,600$	$56,400$
Absorption of A’s deficit balance					$(13,000)$	$(7,800)$	$(5,200)$
Net balance	$98,000$					$46,800$	$51,200$