The Drysdale, Koufax, and Marichal partnership has the following balance sheet i

Question

The Drysdale, Koufax, and Marichal partnership has the following balance sheet immediately prior to liquidation:

Liquidation expenses are estimated to be $20,000. Prepare a predistribution schedule to guide the distribution of cash.

Assume that assets costing $79,000 are sold for $62,500. How is the available cash to be divided?

Cash $ 41,000 Liabilities $ 46,500 Noncash assets 229,000 Drysdale, loan 21,000 Drysdale, capital (50%) 77,500 Koufax, capital (30%) 67,500 Marichal, capital (20%) 57,500

Explanation / Answer

CALCULATION OF AVAILABLE CASH   Cash   $                    41,000 Non- Cash Assets   $           2,29,000 Less: Assets Sold on Reduce Price $               16,500 ($ 79,000 - $ 62,500) Net Non - Cash Assets $                2,12,500 Total Cash and Cash Equivalent Balance $                2,53,500 Less : Liquidation Expenses $               20,000 Less: Liabilities $               46,500 Total Expenses and liabilities paid $                    66,500 Net Cash and Cash Equivalents   $                1,87,000 CALCUALTION OF DISTRIBUTION OF CASH TO PARTNERS Total Drysdale Koufax, Marichal Particulars   100% ('50%) ('30%) ('20%) Cash Available   $           1,87,000 Less: Drysdale, loan $             -21,000 $                    21,000 Balance to Be distribute in Share Ratio $           1,66,000 $                    83,000 $                   49,800 $                     33,200 ($166,000 X 50%) ($166,000 X 30%) ($166,000 X 20%) Total Cash Received by the partner's $                1,04,000 $                   49,800 $                     33,200

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