E16-8 Cash Distribution Plan

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

Sale of other assets

$ 200,000
$ 240,000

Settlement of liabilities

Capital

$ 10,000

$ 200,000

Adams loan debited to

capital

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

Balance cash distributed

$ (190,000)

Ending balances

Blake,

$ 10,000

$ (50,000)
$ 190,000

Peters,

$ (10,000)

45,000

$ (70,000)
-