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 for safe payments and distributed it. The noncash assets were then sold for $120,000. The liquidation expenses of $5,000 were paid. How would the $120,000 be distributed to the partners?
(Hint: Either a predistribution plan or a schedule of safe payments would be appropriate for solving this item.)

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 for safe payments and distributed it. The noncash assets were then sold for $120,000. The liquidation expenses of $5,000 were paid. How would the $120,000 be distributed to the partners?
(Hint: Either a predistribution plan or a schedule of safe payments would be appropriate for solving this item.)

Quizplus · Accepted Answer

Cash from Sale $120,000 - Liquidation Expenses $5,000 = Cash to Distribute $115,000 × 20% = $23,000 + Henry's Portion of Deficit Balance at Safe Distribution $5,000 = Henry's Distribution of $28,000

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