Question

In: Accounting

Determine the amount received by Ellis as a final distribution from liquidation of the partnership.


Prior to liquidating their partnership, Ellis and Dunn had capital accounts of $63,000 and $106,000, respectively. Prior to liquidation, the partnership had no cash assets other than what was realized from the sale of assets. These partnership assets were sold for $188,000. The partnership had $5,000 of liabilities. Ellis and Dunn share income and losses equally.


Determine the amount received by Ellis as a final distribution from liquidation of the partnership.

Solutions

Expert Solution

Total Non-cash Assets will be $ 174,000 =63000+106000+5000
Gain on sale of Non-cash assets           14,000 =188000-174000
Distribution of Gain to partners
Ellis             7,000 =14000/2
Dunn             7,000 =14000/2
Capital Account of Partners after allocation of Gain
Ellis           70,000
Dunn        113,000 =106000+7000
Remaining cash after payment of Liabilities        183,000 =188000-5000
Amount received by Ellis as a final distribution from liquidation of the partnership $ 70,000

ekkarill92 answered 2 years ago
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