Question

In: Accounting

The partnership of Hendrick, Mitchum, and Redding has the following account balances: Cash $ 61,000 Liabilities...

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

Cash $ 61,000 Liabilities $ 30,000
Noncash assets 160,000 Hendrick, capital 150,000
Mitchum, capital 95,000
Redding, capital (54,000 )

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.

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

  2. How should the $31,000 cash that is presently available in excess of liabilities be distributed?

  3. If the noncash assets are sold for a total of $75,000, what is the minimum amount of cash that Hendrick could receive?

Solutions

Expert Solution

Answer 1.

Share from loss of non cash asset (160000×20%)=$32000

Redding capital=$54,000

Maximum amount Redding to contribute=$86000

Answer 2.

Hendrick = $31000

Mitchum = 0

Redding = 0

Answer 3.

Part 3 - Minimum amount hendrick would receive if non cash items are sold for $75000

Particulars Amount
Capital balance of redding $54000
Distribution of Loss on non cash items ($160000 - $75000 = $85000) in ratio of 2:10

$17000

($85000 * 2/10)

Total Deficit of redding capital $71000

Distribution to Hendrick

Particulars
Hendrick capital balance $150000
Less : loss of non cash items distributed in ratio of 4/10 ($85000 * 4/10) $34000
Less : Deficit of redding capital absorbed by hendrick in ratio 4:4 ($71000 * 4/8) $35500
Less : cash distibuted $31000
Balance to be distributed (A) $49500
Cash balance distributed (B) $31000
Maximum amount to be distributed to Hendrick (A + B) $80500

Related Solutions

The partnership of Hendrick, Mitchum, and Redding has the following account balances: Cash $ 57,000 Liabilities...
The partnership of Hendrick, Mitchum, and Redding has the following account balances: Cash $ 57,000 Liabilities $ 36,000 Noncash assets 142,000 Hendrick, capital 108,000 Mitchum, capital 77,000 Redding, capital (22,000 ) 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...
A partnership has the following account balances: Cash, $95,000; Other Assets, $665,000; Liabilities, $305,000; Nixon (50...
A partnership has the following account balances: Cash, $95,000; Other Assets, $665,000; Liabilities, $305,000; Nixon (50 percent of profits and losses), $215,000; Cleveland (30 percent), $150,000; Pierce (20 percent), $90,000. The company liquidates, and $20,500 becomes available to the partners. Who gets the $20,500? Determine how much of this amount should be distributed to each partner.(Do not round intermediate calculations.)
A partnership has the following account balances: Cash, $76,000; Other Assets, $570,000; Liabilities, $258,000; Nixon (50...
A partnership has the following account balances: Cash, $76,000; Other Assets, $570,000; Liabilities, $258,000; Nixon (50 percent of profits and losses), $180,000; Cleveland (30 percent), $130,000; Pierce (20 percent), $78,000. The company liquidates, and $16,500 becomes available to the partners. Who gets the $16,500? Determine how much of this amount should be distributed to each partner. (Do not round intermediate calculations.) Nixon Cleveland Pierce Safe payments:
A partnership has the following account balances: Cash, $70,000; Other Assets, $540,000; Liabilities, $260,000; Nixon (50...
A partnership has the following account balances: Cash, $70,000; Other Assets, $540,000; Liabilities, $260,000; Nixon (50 percent of profits and losses), $170,000; Cleveland (30 percent), $110,000; Pierce (20 percent), $70,000. The company liquidates, and $8,000 becomes available to the partners. Who gets the $8,000? Determine how much of this amount should be distributed to each partner.(Do not round intermediate calculations.) Nixon Cleveland Pierce Safe payments
The partnership of Hendrick, Mitchum, and Redding has thefollowing account balances:Cash$52,000Liabilities...
The partnership of Hendrick, Mitchum, and Redding has the following account balances: Cash $ 52,000 Liabilities $ 38,000 Noncash assets 151,000 Hendrick, capital 124,000 Mitchum, capital 86,000 Redding, capital (45,000 ) This partnership is being liquidated. Hendrick and Mitchum are each entitled to 30 percent of all profits and losses with the remaining 40 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...
A partnership has the following account balances at the date of termination: Cash, $96,000; Noncash Assets,...
A partnership has the following account balances at the date of termination: Cash, $96,000; Noncash Assets, $740,000; Liabilities, $494,000; Bell, capital (50 percent of profits and losses), $160,000; Mann, capital (30 percent), $110,000; Scott, capital (20 percent), $72,000. The following transactions occur during liquidation: Noncash assets with a book value of $580,000 are sold for $480,000 in cash. A creditor reduces his claim against the partnership from $160,000 to $130,000, and this amount is paid in cash. The remaining noncash...
A partnership has liquidated all assets but still reports the following account balances: Beck, loan $...
A partnership has liquidated all assets but still reports the following account balances: Beck, loan $ 9,000 Cisneros, capital (40%) 4,800 Beck, capital (20%) (9,600 ) (deficit) Sadak, capital (10%) (10,400 ) (deficit) Emerson, capital (20%) 15,600 Page, capital (10%) (15,000 ) (deficit) The partners split profits and losses as follows: Cisneros, 40 percent; Beck, 20 percent; Sadak, 10 percent; Emerson, 20 percent; and Page 10 percent. Assuming that all partners are personally insolvent except for Sadak and Emerson, how...
A partnership has liquidated all assets but still reports the following account balances: The partners split...
A partnership has liquidated all assets but still reports the following account balances: The partners split profits and losses as follows: Cisneros, 40 percent; Beck, 20 percent; Sadak, 10 percent; Emerson, 20 percent; and Page 10 percent. Assuming that all partners are personally insolvent except for Sadak and Emerson, how much cash must Sadak now contribute to this partnership?
A partnership has liquidated all assets but still reports the following account balances: Beck, loan $...
A partnership has liquidated all assets but still reports the following account balances: Beck, loan $ 5,500 Cisneros, capital (40%) 3,600 Beck, capital (20%) (12,200 ) (deficit) Sadak, capital (10%) (8,200 ) (deficit) Emerson, capital (20%) 15,500 Page, capital (10%) (6,200 ) (deficit) The partners split profits and losses as follows: Cisneros, 40 percent; Beck, 20 percent; Sadak, 10 percent; Emerson, 20 percent; and Page 10 percent. Assuming that all partners are personally insolvent except for Sadak and Emerson, how...
A partnership has liquidated all assets but still reports the following account balances: Beck, loan $...
A partnership has liquidated all assets but still reports the following account balances: Beck, loan $ 6,000 Cisneros, capital (40%) 3,900 Beck, capital (20%) (12,300 ) (deficit) Sadak, capital (10%) (8,300 ) (deficit) Emerson, capital (20%) 15,000 Page, capital (10%) (6,300 ) (deficit) The partners split profits and losses as follows: Cisneros, 40 percent; Beck, 20 percent; Sadak, 10 percent; Emerson, 20 percent; and Page 10 percent. Assuming that all partners are personally insolvent except for Sadak and Emerson, how...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT