The Abrams, Bartle, and Creighton partnership began the process of liquidation w

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 non cash assets were sold for 134,000. Which partner would have to contiribute assets to the partnership to cover a deficit in his or her capital account?

D. the answer is Abrams and Creighton- can someone explain how

Explanation / Answer

Loss on liquidation = 134,000 - 12,000 - 434,000 = $312,000 (Loss)

Share in losses:
Abrams = 312,000 x 3/10 = $93,600
Bartle = 312,000 x 2/10 = $62,400
Creighton = 312,000 x 5/10 = $156,000

Abrams' and Creighton's share in loss is more than their capital. Thus, Abrams and Creighton will contribute to cover the deficit.

Abrams amount to contribute = 93,600 - 80,000 = $13,600
Creighton amount to contribute = 156,000 - 130,000 = $26,000

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