Question

The partnership of Winn, Xie, Yang, and Zed has the following balance sheet:

Cash	$	33,000	Liabilities	$	36,000
Other assets		223,000	Winn, capital (50% of profits and losses)		63,000
			Xie, capital (30%)		81,000
			Yang, capital (10%)		43,000
			Zed, capital (10%)		33,000

Zed is personally insolvent, and one of his creditors is considering suing the partnership for the $5,000 that is currently owed. The creditor realizes that this litigation could result in partnership liquidation and does not wish to force such an extreme action unless Zed is reasonably sure of obtaining at least $5,000 from the liquidation.

Determine the amount for which the partnership must sell the other assets to ensure that Zed receives $5,000 from the liquidation. Liquidation expenses are expected to be $18,000. (Do not round intermediate calculations.)

Answer 1

Answer :

Given data :

Cash = $33,000

Liabilities = $36,000

Other assets = 223,000

Liquidity expenses = $18,000

Winn, capital (50% of profits and losses) = 63,000

Xie, capital (30% ) = 81,000

Yang, capital (10%) = 43,000

Zed, capital (10%) = 33,000

Assumed amount = $1,26,000(Assumed loss is equal to amount of wins captial)

Particulars	Amount
	Winn(50%)	Xie(30%)	Yang(10%)	Zed(10%)
Capital	$ 63,000	$81,000	$43,000	$33,000
Assumed loss	= $126,000 * 50% =$63,000	=$1,26,000 * 30% = $37,800	=$1,26,000 * 10% =$12,600	=$1,26,000 * 10% =$12,600
Total loss	0	43,200	30,400	20,400
Assumed loss	0	43,200	14,400	14,400
Total loss	0	0	16,000	16,000
Assumed loss	0	0	16,000	6,000
Total	0	0	0	10,000

Minimum amount required :

Particulars	Amount
For liabilities	=$36,000 - $33,000 =$3,000
liquidity Expenses	$18,000
Total	=$3,000 + $ 18,000 =$21,000
To pay yang	$10,000
Total amount	=$21,000 + $ 10,000 =$31,000
To split evently between yang and zed	$12,000
	=$12,000 + $ 31,000 =$43,000
amount	$8,000
Total amount required	=$43,000 + $8,000 =$51,000