The Abrams, Bartle, and Creighton partnership began the process of liquidation with the following balance sheet: Abrams, Bartle, and Creighton share profits and losses in a ratio of 3:2:5. Liquidation expenses are expected to be $12,000. The noncash assets were sold for $134,000. Which partner(s) would have had to contribute assets to the partnership to cover a deficit in his or her capital account?

Question

The Abrams, Bartle, and Creighton partnership began the process of liquidation with the following balance sheet:  Abrams, Bartle, and Creighton share profits and losses in a ratio of 3:2:5. Liquidation expenses are expected to be $12,000. The noncash assets were sold for $134,000. Which partner(s) would have had to contribute assets to the partnership to cover a deficit in his or her capital account?

Quizplus · Accepted Answer

Non-Cash Assets BV $434,000 - Cash Received $134,000 = Loss on Non-Cash Assets ($300,000) × 30% = Loss to Abrams ($90,000) - Capital Balance $80,000 = Abrams' Contribution to Cover $10,000Non-Cash Assets BV $434,000 - Cash Received $134,000 = Loss on Non-Cash Assets ($300,000) × 20% = Loss to Abrams ($60,000) - Capital Balance $90,000 = Bartle Excess after Loss $30,000Non-Cash Assets BV $434,000 - Cash Received $134,000 = Loss on Non-Cash Assets ($300,000) × 50% = Loss to Abrams ($150,000) - Capital Balance $130,000 = Creighton's Contribution to Cover $20,000

The Abrams, Bartle, and Creighton Partnership Began the Process of Liquidation