The partnership of Hendrick, Mitchum, and Redding has the following account bala

Question

The partnership of Hendrick, Mitchum, and Redding has the following account balances:

This partnership is being liquidated. Hendrick and Mitchum are each entitled to 40 percent of all profits and losses with the remaining 20 percent going to Redding.

What is the maximum amount that Redding might have to contribute to this partnership because of the deficit capital balance?

How should the $20,000 cash that is presently available in excess of liabilities be distributed?

If the noncash assets are sold for a total of $50,000, what is the minimum amount of cash that Hendrick could receive?

Cash $ 50,000 Liabilities $ 30,000 Noncash assets 135,000 Hendrick, capital 100,000 Mitchum, capital 70,000 Redding, capital (15,000 )

Explanation / Answer

Answer 1 The maximum amount that Redding might have to contribute to this partnership because of the deficit capital balance = $15000 Answer 2 The $20,000 cash that is presently available in excess of liabilities be distributed in their profit or loss sharing ratio. Answer 3 The minimum amount of cash that Hendrick could receive Hendrick Capital balance before liquidation $100,000 Less : Loss on sale of non cash assets (40% of $85000) $34,000 Minimum Amount payable to Hendrick $66,000 Note : Loss on sale of non cash assets = Book value of non cash assets - Sale value = $135000 - $50000 = $85000

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