Allen Lie, Beverely Cheat and Hugo Steal have been partners in the very successf

Question

Allen Lie, Beverely Cheat and Hugo Steal have been partners in the very successful law firm of Le, Cheat and Steal for many years, however; they have decided to end their law practice The balance sheet of Lie Cheat and Steal on January 2nd 2017 whben they decided to end their law practice is as folows Steal is a S06 partner; Lie is a 306 partner and Cheat is a 20% partner Balance Sheet Lie, Cheat and Steal January 2nd 2017 Cash Accounts recevable Building inet Land 20,000.00 $ 80,000.00 $300,000.00 $500,000.00 Accounts payable 400,000.00 A. Lie capital B. Cheat H. Steal $10,000.00 100,000.00 390,000.00 Question 1: On January 2nd How much (if any) can each partner take as a safe payment? On lanuary 22nd, the law firm so Assuming no one tookany safe payments on January 2nd; how much can each partner take as a safe payment on January 23rd? On February 2 nd Ground Hog Day, the law firm sold the land to The Squirrel Company for $505,000. llof their receivables to The Shark Law Firm for $50,000. Question2: Question 3: Assuming no one previously took any safe payments, how much can each partner take as a safe payment on February 3rd? On February 14th Valentines day, the law firm sold the building to Cupid Company for $222,000 and paid off the accounts payable Question4: Assuming no one previously tookany safe payme nts, and an partnerwitha negative balance in their capital cannot cover their shotage how much does each partner get in the final partner distribution? Question S: Assuming no one previously took any safe payments, and any partnerwith a negative balance in their capital CAN cover the shortage how much does each partner contribute or receive in the final partner distribution?

Explanation / Answer

Answers:- Q-1 Funds Available for Partners:- Particulars Amount Cash 20000 Accounts Receivale 50000 Buidling NET 300000 Land 500000 Toatl of Assets (A) 870000 Less:- Liabilities: Accounts Payable (B) 400000 Net Funds Available for Partners (A-B) 470000 Calculation of Safe Payments Partners Capital Amount Lie 10000 Cheat 100000 Steal 390000 Total of Capital 500000 As funds available is Less than capital Partners will be paid Proportaion of Capital Ratio Partners- ANS Safe Payment Amount Lie 9400 Cheat 94000 Steal 366600 Safe Payments to Partners 470000 Q-2 Funds Available for Partners:- Particulars Amount Cash 20000 Accounts Receivale 80000 Buidling NET 300000 Land 505000 Toatl of Assets (A) 905000 Less:- Liabilities: Accounts Payable (B) 400000 Net Funds Available for Partners (A-B) 505000 As funds available is More than capital Partners will be paid 1st Capital Actual Amount and Balance in Profit Ratio Partners- ANS Capital Amount Balance in Profit Ratio Safe Payment Amount Lie-20% 10000 1000 11000 Cheat-30% 100000 1500 101500 Steal- 50% 390000 2500 392500 Total 500000 5000 505000 Q-3 Funds Available for Partners:- Particulars Amount Cash 20000 Accounts Receivale 80000 Buidling NET 222000 Land 505000 Toatl of Assets (A) 827000 Less:- Liabilities: Accounts Payable (B) 400000 Net Funds Available for Partners (A-B) 427000 As funds available is Less than capital Partners will be paid Proportaion of Capital Ratio Partners- ANS Safe Payment Amount Lie 8540 Cheat 85400 Steal 333060 Safe Payments to Partners 427000 Q-4 Funds Available for Partners:- Particulars Amount Cash 20000 Accounts Receivale 80000 Buidling NET 300000 Land 500000 Toatl of Assets (A) 900000 Less:- Liabilities: Accounts Payable (B) 400000 Net Funds Available for Partners (A-B) 500000 As funds available equal to capital Partners will be paid Proportaion of Capital Ratio Partners- ANS Safe Payment Amount Lie-20% 10000 Cheat-30% 100000 Steal- 50% 390000 Total 500000 Q-5 Funds Available for Partners:- Particulars Amount Cash 20000 Accounts Receivale 80000 Buidling NET 300000 Land 500000 Toatl of Assets (A) 900000 Less:- Liabilities: Accounts Payable (B) 400000 Net Funds Available for Partners (A-B) 500000 As funds available equal to capital Partners will be paid Proportaion of Capital Ratio Partners- ANS Safe Payment Amount Lie-20% 10000 Cheat-30% 100000 Steal- 50% 390000 Total 500000

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