Question

A local dental partnership has been liquidated and the final capital balances are as follows:
Atkinson, capital (40% of all profits and losses) . . . . . . . . . . . . . . . . $ 70,000
Kaporale, capital (30%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Dennsmore, capital (20%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (42,000)
Rasputin, capital (10%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (58,000)
If Rasputin contributes additional cash of $20,000 to the partnership, what should happen to it?

Distribute Cash Contributed by Partner with Deficit Balance
		Atkinson	Kaporale	Dennsmore	Rasputin
Reported balances		$70,000	$30,000	($42,000)	($58,000)
Capital contribution		0	0	0	20,000
Adjusted balances		70,000	30,000	-42,000	-38,000
Potential loss from Dennsmore
	and Rasputin ($80,000) split
	on a 4:3 basis
Adjusted balances
Potential loss from Kaporale
Cash distribution

Answer 1

Solution:

Distribution of cash - Local dental partnership
Particulars	Atkinson	Kaporale	Dennsmore	Rasputin
Reported balances	$70,000	$30,000	-$42,000	-$58,000
Capital contribution	$0	$0	$0	$20,000
Adjusted balances	$70,000	$30,000	-$42,000	-$38,000
Potential loss from dennsmore and rasputin split on a 4:3 basis ($80,000)	-$45,714	-$34,286	$42,000	$38,000
Adjsuted balances	$24,286	-$4,286	$0	$0
Potential loss from Kaporale	-$4,286	$4,286	$0	$0
Cash distribution	$20,000	$0	$0	$0