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Adams, peters, and Blake share Profits and losses for their APB Partnership in
a ratio of 2:3:5.
When they decide to liquidate, the balance sheet is as follows:
Assets
Liabilities and Equities
$40,00
$50,00
Cash
0 Liabilities
0
Adams,
Loan
10,000 Adams, Capital
55,000
Other
200,00
Assets
0 Peters, Capital
75,000
Blake, Capital
70,000
Total
$250,0 Total Liabilities and
$250,0
Assets
00 Equities
00
Liquidation expenses are expected to be negligible, No interest accrues on
loans with partners after termination of the business.
Required: Prepare a cash distribution plan for the APB Partnership.
Solution:
Assumption: Other assets are assumed to be sold at the book value of
$200,000 as its market or sale value is not given.
CASH DISTRIBUTION PLAN
Cash
Other
assets
Adams,
Liabilities
Adams,
Loan
Balance before liquidation
40,000
$ 200,000
$ 240,000
Settlement of liabilities
Capital
$ 10,000
$ 200,000
Capital
Capital
50,000
55,000
$ 75,000
$ 70,000
50,000
55,000
$ 75,000
$ 70,000
55,000
$ 75,000
$ 70,000
$ 70,000
$ (45,000)
$ 75,000
$
(75,000)
$ (200,000)
$
$ 10,000
$ (50,000)
$ (10,000)
$ 190,000
$ (190,000)
Ending balances
Blake,
$ 10,000
$ (50,000)
$ 190,000
Peters,
$ (10,000)
45,000
$ (70,000)
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