The Henry, Isaac, and Jacobs partnership was about to enter liquidation with the following account balances: Estimated expenses of liquidation were $5,000. Henry, Isaac, and Jacobs shared profits and losses in a ratio of 2:4:4. Before liquidating any assets, the partners determined the amount of cash available for safe payments. How should the amount of safe cash payments be distributed?

Question

The Henry, Isaac, and Jacobs partnership was about to enter liquidation with the following account balances:  Estimated expenses of liquidation were $5,000. Henry, Isaac, and Jacobs shared profits and losses in a ratio of 2:4:4. Before liquidating any assets, the partners determined the amount of cash available for safe payments. How should the amount of safe cash payments be distributed?

Quizplus · Accepted Answer

Non-Cash Assets BV $300,000 - Assumed Cash Received $0 = Loss on Non-Cash Assets ($300,000) × 20% = Loss to Henry ($60,000) - Capital Balance $80,000 = Henry's Provisional Balance $20,000Non-Cash Assets BV $300,000 - Assumed Cash Received $0 = Loss on Non-Cash Assets ($300,000) × 40% = Loss to Isaac ($120,000) - Capital Balance $110,000 = Isaac's Provisional Balance ($10,000)Non-Cash Assets BV $300,000 - Assumed Cash Received $0 = Loss on Non-Cash Assets ($300,000) × 40% = Loss to Jacobs ($120,000) - Capital Balance $140,000 = Jacobs' Provisional Balance $20,000Isaac's Provisional Balance ($10,000) + Liquidation Expenses ($5,000) = Loss for Remaining Partners ($15,000)/3 = Henry's Portion ($5,000) + Henry's Provisional Balance $20,000 = Henry's Safe Distribution $15,000Isaac's Provisional Balance ($10,000) + Liquidation Expenses ($5,000) = Loss for Remaining Partners ($15,000) × 2/3 = Jacobs' Portion ($10,000) + Jacobs' Provisional Balance $20,000 = Jacobs' Safe Distribution $10,000

The Henry, Isaac, and Jacobs Partnership Was About to Enter