Partnership Problems

Cecil Davis

ACC 407 Advanced Accounting

Instructor: Ashley Harper

January 11, 2018

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 E16-8: Cash Distribution Plan

Adams, Peters, and Blake share profits and losses for their APB Partnership in a ratio of

2:3:5. When they decide to liquidate, the balance sheet is as follows:

Assets Liabilities & Equities

Cash $40,000 Liabilities $50,000
Adams, Loan $10,000 Adams, Capital $55,000
Other Assets $200,000 Peters, Capital $75,000
Blake, Capital $70,000
Total Assets $250,000 Total Liability & $250,000
Equities

Liquidation expenses are expected to be negligible. No interest accrues on loans with

partners after termination of the business.

Required:

Prepare a cash distribution plan for the APB Partnership.

CASH DISTRIBUTION PLAN

Other
Cash Adams, assets Liabilities Adams, Peters, Blake,
Loan Capital Capital Capital

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 Balance before liquidation $ 40,000 $ 10,000 $ 200,000 $ 50,000 $ 55,000 $ 75,000 $ 70,000
$
Sale of other assets $ 200,000 (200,000)
$ 240,000 $ 10,000 $ - $ 50,000 $ 55,000 $ 75,000 $ 70,000
Settlement of liabilities $ (50,000) $ (50,000)
$ 190,000 $ 10,000 $ - $ - $ 55,000 $ 75,000 $ 70,000
Adams loan debited to
capital $ (10,000) $ (10,000)
$ 190,000 $ - $ - $ - $ 45,000 $ 75,000 $ 70,000
$
Balance cash distributed $ (190,000) $ (45,000) (75,000) $ (70,000)
Ending balances $ - $ - $ - $ - $ - $ - $ -

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