Question

The ABC partnership reports the following condensed balance sheet:

Cash	$250,000		Liabilities	$600,000
Noncash assets	1,200,000		Partner A, capital	300,000
			Partner B, capital	450,000
			Partner C, capital	100,000
Total assets	$1,450,000		Total liabilities and partner capital	$1,450,000

The partners wish to liquidate the partnership. The noncash assets are sold for $800,000 with the loss distributed to the partners in the ratio of 30%:20%:50% to partner A, B, and C, respectively. The liabilities are paid in full. Assume that any partners with a negative balance in their respective Capital Accounts are insolvent and, therefore, do not make any capital contribution to the partnership (i.e., remaining partners must absorb the negative Capital Account according to their profit sharing formula). Prepare a schedule detailing the liquidation of the assets, repayment of the liabilities, and distribution of the remaining cash to the partners.

HINT: Use a negative sign with answers that reduce account balances.

Liquidation Schedule of ABC Partnership
					-----Capital Accounts-----
	Cash	Noncash Assets	Liabilities		A	B	C
Capital account, prior to liquidation	Answer	Answer	Answer		Answer	Answer	Answer
Sale of noncash assets	Answer	Answer	Answer		Answer	Answer	Answer
	Answer	Answer	Answer		Answer	Answer	Answer
Allocation of deficit	Answer	Answer	Answer		Answer	Answer	Answer
	Answer	Answer	Answer		Answer	Answer	Answer
Payment of creditors	Answer	Answer	Answer		Answer	Answer	Answer
	Answer	Answer	Answer		Answer	Answer	Answer
Distribution to partners	Answer	Answer	Answer		Answer	Answer	Answer
Post-liquidation balances	Answer	Answer	Answer		Answer	Answer	Answer

Answer 1

For calculation ref: