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Problem 4: On January 1, 2020, L Company Entered Into Liquidation. The Partner's Capital Balances On

L Company entered liquidation on January 1, 2020 with partner capital balances of $125,000 for A (25%), $270,000 for C (35%), and $185,000 for J (40%). The partnership had $220,000 in liabilities including a $30,000 loan from C and $40,000 in cash on hand. Certain assets were sold for $370,000, other non-cash assets were sold for $210,000, resulting in $430,000 of cash to be distributed to partners: $80,000 for A, $237,000 for C, and $113,000 for J.

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94 views

Problem 4: On January 1, 2020, L Company Entered Into Liquidation. The Partner's Capital Balances On

L Company entered liquidation on January 1, 2020 with partner capital balances of $125,000 for A (25%), $270,000 for C (35%), and $185,000 for J (40%). The partnership had $220,000 in liabilities including a $30,000 loan from C and $40,000 in cash on hand. Certain assets were sold for $370,000, other non-cash assets were sold for $210,000, resulting in $430,000 of cash to be distributed to partners: $80,000 for A, $237,000 for C, and $113,000 for J.

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© © All Rights Reserved
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Problem 4: On January 1, 2020, L Company entered into liquidation.

The partner’s capital balances on


this date are as follows:
A (25%) 125,000
C (35%) 270,000
J (40%) 185,000
The partnership has liabilities amounting to 220,000, including a loan from C (30,000), cash on hand
before the start of liquidation is 40,000. With the information given, answer the following independent
situation:
a. Certain assets were sold for 370,000 and the rest of the non-cash assets were sold at 210,000.
How much is the cash to be distributed to the partners? 430,000 – 80K for A; 237K for C; 113K
for J
b. After exhausting the noncash assets of the partnership, how much cash must be invested by the
partners to satisfy the claims of the outside creditors and to pat the amount due to the partners?
184,000

c. If C received 112,750, how much was loss from the realization of the noncash assets?

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