The Pen, Evan, and Torves Partnership has asked you to assist in winding-up its

Question

The Pen, Evan, and Torves Partnership has asked you to assist in winding-up its business affairs. You compile the following information.

The partners share profits and losses as follows: Pen, 50 percent; Evan, 25 percent; and Torves, 25 percent.

The partners are considering an offer of $113,000 for the firm’s accounts receivable, inventory, and plant and equipment as of June 30. The $113,000 will be paid to creditors and the partners in installments, the number and amounts of which are to be negotiated.

The partners share profits and losses as follows: Pen, 50 percent; Evan, 25 percent; and Torves, 25 percent.

The partners are considering an offer of $113,000 for the firm’s accounts receivable, inventory, and plant and equipment as of June 30. The $113,000 will be paid to creditors and the partners in installments, the number and amounts of which are to be negotiated.

Prepare a cash distribution plan as of June 30, 20X1, showing how much cash each partner will receive if the partners accept the offer to sell the assets.

The Pen, Evan, and Torves Partnership has asked you to assist in winding-up its business affairs. You compile the following information.

Explanation / Answer

$ 1 Book value of assets; Accounts Receivable (net)           40,000 Inventory           28,000 Plant and Equipment (net)           98,300 Total book values of assets         166,300 Less: Realizable value       (113,000) Total loss on sale of assets           53,300 2 Cash balance available before settlement             7,300 Add: Sale value of assets         113,000 Less: settlement of Accounts Payable         (11,100) Cash available for distribution         109,200 PET PARTNERSHIP Cash Distribution Plan , June 30,20x1 Loss Absorption Potential Capital Accounts Total Pen Evan Torves Pen Evan Torves Profit and loss percentages 50% 25% 25% Preliquidation capital balances      68,000      57,500      37,000    162,500 Loss Absorption         (26,650)              (13,325)    (13,325)     (53,300) Capital balance after loss absorption      41,350      44,175      23,675    109,200 Cash distribution      (41,350)    (44,175)    (23,675) (109,200) Balance              -                -                -                 -

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.