Question

In: Accounting

Prior to liquidating their partnership, Jolly and Bain had capital accounts of $18,000 and $68,000, respectively....

Prior to liquidating their partnership, Jolly and Bain had capital accounts of $18,000 and $68,000, respectively. The partnership assets were sold for $34,000. The partnership had no liabilities. Jolly and Bain share income and losses equally.

Required:

a. Determine the amount of Jolly's deficiency.
$

b. Determine the amount distributed to Bain, assuming Jolly is unable to satisfy the deficiency.

Solutions

Expert Solution

Particulars Amount (in $ )
Sale value of assets $ 34,000
Less : Carrying value of assets
             ( $ 18,000 + $ 68,000 )		 ($ 86,000)
Loss on liquidation $ 52,000
(a)
Amount of Jolly's deficiency
         = Balance before liquidation (-) Share of Loss
         =    $ 18,000 (-) [ $ 52,000 x 50% ]
        =   $ 18,000 (-) $ 26,000		 ($ 8,000)
(b)
Amount distributed to Bain
           = Balance before liquidation (-) Share of Loss (-) Jolly's deficiency
         =    $ 68,000 (-) [ $ 52,000 x 50% ] (-) $ 8,000
         =    $ 68,000 (-) $ 26,000 (-) $ 8,000		 $ 34,000

ekkarill92 answered 2 years ago
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