A local partnership is considering possible liquidation because one of the partn

Question

A local partnership is considering possible liquidation because one of the partners (Bell) is insolvent. Capital balances at the current time are as follows. Profits and losses are divided on a 4:3:2:1 basis, respectively.

Bell’s creditors have filed a $31,000 claim against the partnership’s assets. The partnership currently holds assets reported at $400,000 and liabilities of $200,000. If the assets can be sold for $240,000, what is the minimum amount that Bell’s creditors would receive?

  Bell, capital $ 76,000   Hardy, capital 66,000   Dennard, capital 10,000   Suddath, capital 90,000

Explanation / Answer

$12000 is the minimum amount that Bell’s creditors would receive.

Now, if dennard wont able to recover hs debit balance on his own then bell minimum cash balance would be $1000.

particulars bell hardy dennard suddath Opening balance 76000 66000 10000 90000 Less:distribution of loss 64000 48000 32000 16000 After distribution 12000 18000 (22000) 74000 Distribution of dennarf debit balance (11000) (8250) 22000 (2750) Minimum disburstments 1000 9750 - 71250

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