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The noncash assets realized cash of $35,000, with a resultant loss of $40,000 absorbed
equally by Abra and Barg. The liquidation process will take 15 days.
Required
As the partnership’s accountant prepare statement of realization and liquidation
Example 2: equity of one partner is not sufficient to absorb partner’s loss from
realization.
Assume the balance sheet below for Diel, Ebbs & Frey LLP
DIEL, EBBS & FREY LLP
Balance Sheet
30-Jun-13
Liabilities and Partners'
Assets Capital
Cash $20,000 Liabilities 30,000
Other
Assets 80,000 Diel Capital 40,000
Ebbs Capital 21,000
Frey Capital 9,000
Total $100,000 Total 100,000
The income-sharing ratio is Diel, 20%, Ebbs, 40%; and Frey 40%. The other assets with
a carrying amount of $80,000 realized $50,000 cash. Frey pays $3,000 to the
partnership.
Required
As the partnership’s accountant prepare statement of realization and liquidation
Required
As the partnership’s accountant prepare statement of realization and liquidation
Required
As the partnership’s last accountant prepare statement of realization and liquidation
JKLM LLP
Balance Sheet
30-Nov-13
Liabilities and Partners'
Assets Capital
Cash $10,000 Liabilities $60,000
Other
Assets 100,000 Rich, Capital 5,000
Sand, Capital 15,000
Toll, Capital 30,000
Total $110,000 Total 110,000
Assume also that on November 30, 2013, the partners’ have the following assets and
liabilities other than their equities in the partnership.
Partners Personal Assets Personal Liabilities
Rich $100,000 $25,000
Sand $50,000 $50,000
Toll $5,000 $60,000