Question

In: Accounting

The partnership of Anderson, Berry, Hammond, and Winwood is being liquidated. It currently holds cash of...

The partnership of Anderson, Berry, Hammond, and Winwood is being liquidated. It currently holds cash of $21,200 but no other assets. Liabilities amount to $32,500. The capital balances are

Anderson (40% of profits and losses) $ 38,700

Berry (30%) 27,000

Hammond (10%) (36,000 ) (deficit)

Winwood (20%) (41,000 ) (deficit)

a. If both Hammond and Winwood are personally insolvent, how much money must Berry contribute to this partnership?

b-1. If only Winwood is personally insolvent, how much money must Hammond contribute?

b-2. If only Winwood is personally insolvent, how will Hammond's contribution (funds) be disbursed?

c. If only Hammond is personally insolvent, how much money should Anderson receive from the liquidation?

A. Berry's Contribution 6,000

B-1 Hammond's Contribution ??

B-2 Creditors 11,300

Anderson ??

Berry ??

C. Anderson should recieve???

Solutions

Expert Solution

A)

Amount- Debit/(credit)
Particular cash liability anderson Berry hammond winwood
Opening balance 21200 -32500 -38700 -27000 36000 41000
Payment of liabilities -21200 21200
Balance 0 -11300 -38700 -27000 36000 41000
Hammond and winwood allocation(4:3) 0 0 44000 33000 -36000 -41000
Balance 0 -11300 5300 6000 0 0

Berry has to contribute $6000

B-1)

Paticular cash liability anderson berry hammond winwood
Opening balance 21200 -32500 -38700 -27000 36000 41000
Payment of liabilities -21200 21200
Balance 0 -11300 -38700 -27000 36000 41000
Winwood allocation(4:3:1) 0 0 20500 15375 5125 -41000
Balance 0 -11300 -18200 -11625 41125 0

Hammond contribution = $41125

B-2)

Out of the hammond contribution of $41125 the amount disbursed to:

1) creditore = $11300

2) anderson = $18200

3) berry = $11625

C)

Particular cash liability anderson berry Hammond winwood
Op. Balance 21200 -32500 -38700 -27000 36000 41000
Payment of liabilities -21200 21200
Balance 0 -11300 -38700 -27000 36000 41000
Hammond allocation(4:3:2) 0 0 16000 12000 -36000 8000
Balance 0 -11300 -22700 -15000 0 49000

Anderson will receive $22700 from liquidation.

For any query please comment and

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ekkarill92 answered 1 year ago
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