Question

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???

Answer 1

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.

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