Practice 11- Ch 15 Partnership Liquidation

Practice 11- Ch 15 Partnership Liquidation - 1 Ch 15:...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 1 Ch 15: Partnership Liquidation Three Practice Problems: 15-5, 15-20, and 15-28 Solutions: Problem 1: 15 5. 5. B Insolvent Partner Bell Hardy Dennard Reported balances $50,000 $56,000 $14,000 $80,000 Suddath Loss on sale of assets ($110,000) split on a 4:3:2:1 basis (44,000 ) (33,000 ) (22,000 ) (11,000 Adjusted balances $ 6,000 $23,000 $(8,000) $69,000 ) Potential loss from Dennard deficit (split 4:3:1) (4,000 ) (3,000 ) 8,000 (1,000 Minimum cash distributions $2,000 $20,000 $ -0- $68,000 ) Problem 2: 15 -20. Determine Payments under a Variety of Circumstances; Safe Capital Balances; Predistribution Plan (50 minutes) a. Dobbs receives the entire $10,000. Maximum potential losses of $250,000 on noncash assets would be allocated as follows: Partner Share of Loss New Capital Balance Adams 2/10 x $250,000 = $50,000 $ 30,000 Baker 3/10 x $250,000 = $75,000 $(45,000) Carvil 3/10 x $250,000 = $75,000 $(15,000) Dobbs 2/10 x $250,000 = $50,000 $ 40,000 Maximum total potential losses of $60,000 to be absorbed from Baker and Carvil above would then be allocated as follows on a 2:2 basis: Adams 2/4 x $60,000 = $30,000 -0- Dobbs 2/4 x $60,000 = $30,000 $ 10,000 Absorbing the final loss would leave Dobbs with a safe capital balance of $10,000. b. Adams receives the entire $10,000. Maximum potential losses of $250,000 on noncash assets would be allocated as follows: Partner Share of Loss New Capital Balance Adams 2/10 x $250,000 = $50,000 $ 30,000 Baker 2/10 x $250,000 = $50,000 $(20,000) Carvil 3/10 x $250,000 = $75,000 $(15,000) Dobbs 3/10 x $250,000 = $75,000 $ 15,000 Maximum total potential losses of $35,000 to be absorbed from Baker and Carvil above would be allocated as follows on a 2:3 basis:...
View Full Document

Page1 / 5

Practice 11- Ch 15 Partnership Liquidation - 1 Ch 15:...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online