The Pen, Evan, and Tones Partnership has ?sked you to assist in winding-up its b

Question

The Pen, Evan, and Tones Partnership has ?sked you to assist in winding-up its business affairs. You compile the following information: 1. The partnership's trial balance on June 30, 20X1, is Debit $ 5,800 21,500 11,000 97,900 Cash Accounts Receivable (net) Inventory Plant and Equipment (net Accounts Payable Pen, Capital Evan, Capital Torves, Capital Total s 18,100 53,100 43,000 $136,200 136,200 2. The partners share profits ?nd losses as follows: Pen, 60 percent, Evan, 20 percent and Torves, 20 percent 3. The partners are considering an offer of $101,000 for the firm's accounts receivable, inventory, and plant and equipment as of June 30. The $101,000 will be paid to creditors and the partners in installments, the number and amounts of which are to be negotiatecd

Explanation / Answer

PET PARTNERSHIP Cash Distribution Plan June 30, 20X1                           Loss Absorption Potential Capital Accounts Pen Evan Torves Pen Evan Torves Profit and loss percentages 0 0 0 60.00% 20.00% 20.00% Preliquidation capital balances (given) 0 0 0 -$53,100 -43000 -$22,000 Loss absorption potential (capital balances / loss percent) -$88,500 -$215,000 -$110,000 0 0 0 Decrease highest LAP to next highest: ($215000-$110,000) Evan = $105,000 x 20% 0 $105,000 0 0 $21,000 -$88,500 -$110,000 -$110,000 -$53,100 -$22,000 -$22,000 Decrease LAPs to next highest: (110,000 -88,500) Evan ($21,500 x20%) 0 $21,500 0 0 $4,300 0 Torves = (21,500 x 20%) 0 0 $21,500 0 0 $4,300 -$88,500 -$88,500 -$88,500 -$53,100 -$17,700 -$17,700

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

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