Question

The Abrams, Bartle, and Creighton partnership began the process of liquidation with the following balance sheet:

Cash 16,000
Noncash asset 434,000
Total- 450,000
Liability-150000
Abrams-80,000
Bartle- 90,000
Creighton-130,000
total- 450,000
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, prior to considering the liquidation expenses incurred?

Answer 1

Answer and Explanation:

The contribution of assets to the partnership to cover a deficit is presented below:  

Particulars          Abram                      Bartle                       Creighton

Capital Balance  $80,000                  $90,000                  $130,000

Less:

Allocation of non cash assets sold ($434,000 - $134,000) = $300,000 in 3 : 2 :5 ratio

                           -$90,000                    -$60,000                  -$150,000

Liquidation expense -$3,600               -$2,400                    -$6,000

Liabilities  ($150,000 - $16,000) = $134,000 in 3 : 2 :5 ratio

                              -$40,200                 -.$26,800                 -$67,000

Adjusted capital balance -$53,800         $800                       -$93,000

So based on the above calculation the Abram and Creighton have to contribute the assets