Chapter 16, Problem 16.1.3E
Liquidation of partnership: Winding-up and liquidation of the partnership begin after its dissolution. The winding-up process includes the transactions necessary to liquidate the partnership, such as collection of receivables disposal of noncash assets, payment of partnership’s obligations and distribution of any remaining net balance to the partners, in cash according to their capital interests. If partnership agreement does not have any provisions on liquidation or any liquidation ratio or profits or loss ratio for distribution of remaining balance, it is distributed using normal profit and loss ratio during partnership’s operation.
To choose:the correct answer to determine amount distributed to each partner on liquidation when partnership is liquidated in instalments as cash become available, if inventory costing $200,000 is sold for $140,000.
