Jones, Marge, and Tate LLP decided to dissolve and liquidate the partnership on

Question

Jones, Marge, and Tate LLP decided to dissolve and liquidate the partnership on September 30, 2018. After realization of a portion of the noncash assets, the capital account balances were Jones $50,000; Marge $40,000; and Tate $15,000. Cash of $35,000 and other assets with a carrying amount of $100,000 were on hand. Creditors' claims totaled $30,000. Jones, Marge, and Tate shared net income and losses in a 2:1:1 ratio, respectively. Prepare a working paper to compute the amount of cash that may be paid to creditors and to partners at this time, assuming that no partner is solvent.

Explanation / Answer

Working Paper Cash on Hand 35000 Lesspaid to creditors 30,000 Cash on Hand after payment to creditors 5,000 Carrying amount of other assets 100,000 Total value of assets 105,000 Capital Balances of partners Jones 50000 Marge 40000 Tate 15000 Total Capital contribution till date 105000 During liquidation the remaining assets are distributed based on the ending balances of the partners Hence, the partners would receive or take over the remainig assets based on the existing capital balances

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