H and Patel sre partners shang gans nd loases eam Tey oode t

H and Patel sre partners, shang gans .nd loases eam. Tey oode to terminate ther partrenip, prer bo reolgation, ther $24,000, respectively. Aher a noroaah assets bre soldd siabites are pad, there \" a cath balance of tas,ooo What is the amount of a pan or loss on realignion? amount ora b. How should the gain or loss be divided beteeen newit and Pate cash be divided between Hewin and Pat an amount is ae, enter 20 p 8 0

Solution

Solution a:

Captial balances prior to realization:

Hewett Capital = $36,000

Patel capital = $24,000

It means net assets as ber books prior to realization was $60,000 (36,000 + $24,000).

Net proceeds from realization = $45,000

Therefore Profit / (loss) on realization = $45,000 - $60,000 = ($15,000)

Solution b:

As hewett and patel shares profit & loss equally therefore realization loss will be distributed in their profit sharing ratio:

Hewett share in loss = $15000*1/2 = $7,500

Patel share in loss = $15000*1/2 = $7,500

Solution c:

Hewett & Patel
Distribution of Cash
Particulars	Hewett	Patel
Capital balances before realization	$36,000.00	$24,000.00
Divison of gain or (loss) on realization	-$7,500.00	-$7,500.00
Balances	$28,500.00	$16,500.00
Cash distributed to Partners	-$28,500.00	-$16,500.00
Final balances	$0.00	$0.00