P 17-4 Installment liquidation The partnership of Gil, Hal, Ian, and Joe is preparing to liquidate. Profit- and loss-sharing ratios are shown in the summarized balance sheet at December 31, 2016, as follows: Cash $100,000 Other liabilities $ 50,000 Inventories 100,000 Gil capital (40%) 150,000 Loan to Hal 10,000 Hal capital (30%) 160,000 Other assets 255,000 Ian capital (20%) 50,000 Joe capital (10%) 55,000 $465,000 $465,000 Required The partners anticipate an installment liquidation. Prepare a cash distribution plan as of January 1, 2017, that includes a $25,000 contingency fund to help the partners predict when they will be included in cash distributions. During January 2017, the inventories are sold for $100,000, the other liabilities are paid, and $50,000 is set aside for contingencies. The partners agree that loan balances should be closed to capital accounts and that remaining cash (less the contingency fund) should be distributed to partners. How much cash should each partner receive?
P 17-4 Installment liquidation
The partnership of Gil, Hal, Ian, and Joe is preparing to liquidate. Profit- and loss-sharing ratios are shown in the summarized balance sheet at December 31, 2016, as follows:
|
Cash |
$100,000 |
Other liabilities |
$ 50,000 |
|
Inventories |
100,000 |
Gil capital (40%) |
150,000 |
|
Loan to Hal |
10,000 |
Hal capital (30%) |
160,000 |
|
Other assets |
255,000 |
Ian capital (20%) |
50,000 |
|
|
|
Joe capital (10%) |
55,000 |
|
|
$465,000 |
|
$465,000 |
Required
-
The partners anticipate an installment liquidation. Prepare a cash distribution plan as of January 1, 2017, that includes a $25,000 contingency fund to help the partners predict when they will be included in cash distributions.
-
During January 2017, the inventories are sold for $100,000, the other liabilities are paid, and $50,000 is set aside for contingencies. The partners agree that loan balances should be closed to capital accounts and that remaining cash (less the contingency fund) should be distributed to partners. How much cash should each partner receive?
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