Partners Able, Baker, and Chapman have the following personal assets, personal liabilities, and partnership capital balances: Assume profits and losses are allocated equally.
If Baker is in bankruptcy and is able to make a contribution, the capital balance for Able would be

Question

Partners Able, Baker, and Chapman have the following personal assets, personal liabilities, and partnership capital balances:  Assume profits and losses are allocated equally.
If Baker is in bankruptcy and is able to make a contribution, the capital balance for Able would be

Quizplus · Accepted Answer

If Baker is in bankruptcy, his assets will be allocated between his personal creditors and his deficit capital balance. The contribution he will be able to make is:
(32,000 / 82,000) x 80,000 = 31,220
This makes his deficit balance 780 (32,000 - 31,220), which will be divided evenly between Able and Chapman since the partners divide income evenly. Able's balance is 50,000 - 390 or 49,610.

Partners Able, Baker, and Chapman Have the Following Personal Assets