Ch 123 Exercises and Problems Liquidating PartnershipsCapita

Ch 12-3 Exercises and Problems Liquidating Partnerships-Capital Deficiency Nettles, King, and Tanaka are partners sharing income 3:2:1. After the firm\'s loss from liquidation is distributed, the capital account balances were: Nettles, $30,000 Dr.; King, $107,000 Cr.; and Tanaka, $80,000 Cr If Nettles is personally bankrupt and unable to pay any of the $30,000, what will be the amount of cash received by King and Tanaka upon liquidation? If an amount is zero, enter in O. Use the minus sign to indicate any deficiencies. Amount of Cash Received KingTanaka Capital balances after realization Distribution of partner deficiency Capital balances after deficiency distribution

Solution

Amount of cash received Nettles King Tanaka Capital Balance after Realization -$30,000.00 $107,000.00 $80,000.00 Distributipn of Partner deficiency $30,000.00 -$20,000.00 -$10,000.00 Capital balance after deficiency distribution $0.00 $87,000.00 $70,000.00 Profit shareing ratio of Nettle : King : Tanaka 3:2:1 If Loss of Nettle shared by King and tanuaka according to profit sharing ratio then 2/3 of loss of Neetle will be share by King and 1/3 of loss will be share by Tanaka King will share ( 30000*2/3) 20000 Nettle will share ( 30000*1/3) 10000