A partnership is considering possible liquidation because one of the partners (Bell) is personally insolvent. Profits...
A partnership is considering possible liquidation because one of the partners (Bell) is personally insolvent. Profits and losses are divided on a 4:3:2:1 basis, respectively. Capital balances at the current time are
| Bell, capital | $ | 72,500 |
| Hardy, capital | 65,000 | |
| Dennard, capital | 11,000 | |
| Suddath, capital | 89,000 | |
Bell’s creditors have filed a $30,000 claim against the partnership’s assets. The partnership currently holds assets of $390,000 and liabilities of $152,500. If the assets can be sold for $235,000, what is the minimum amount that Bell’s creditors would receive?
rev: 11_27_2017_QC_CS-110177
Multiple Choice
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$0
-
$500
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$2,500
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$10,500
Homework Answers
Option $500
| Value of assets | 390,000 | |||
| Less: sale price of assets | 235,000 | |||
| Loss on sale of assets | 155,000 | |||
| Bell | Hardy | Dennard | Suddath | |
| Capital | 72500 | 65000 | 11000 | 89000 |
| Share in net assets | 62000 | 46500 | 31000 | 15500 |
| Adjusted balances | 10500 | 18500 | -20000 | 73500 |
| Potential loss 20,000 in the ratio 4:3:1 | -10000 | -7500 | 20000 | -2500 |
| Minimum cash distributions | 500 | 11000 | 0 | 71000 |
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