PROBLEM 1

#10-12.
Cash NCA Liabilities JESSE (35%) JAMES (25%)
January Transactions
Balances 80,000 1,100,000 180,000 327,000 255,000
Sale of NCA 182,600 202,600 -7,000 -5,000
Payment of Liabilities (20%) -90,000 -90,000
Balances 172,600 90,000 320,000 250,000
Safe Payment* -70,000 -1,500 -22,500
Balances, End of January 102,600 318,500 227,500

Safe Payment Schedule*

Balances 172,600 897,400 12,000,000 320,000 250,000
Possible future loss -897,400 -314,090 -224,350
Cash Holdbacks:
Future Expenses 12,600 -4,410 -3,150
Payment to Liabilities -90,000 -90,000
Safe Payment 70,000 1,500 22,500

Supporting Computations:
Jesse, Capital 327,000
Share in Loss -7,000
Balance before payments 320,000

Cash Received by Jesse 1,500

Share in Cash Withheld 4,410
Balance before payments -320,000
Share in Possible Loss 314,090
(314,090 / 35%)
Possible Loss 897,400

Total NCA 1,100,000

Possible Loss (Unsold NCA) 897,400
CV of Sold NCA 202,600
Loss from Sale -20,000
Net Proceeds from Sale 182,600

PROBLEM 2
#13-15. PAYMENT
Cliff Jay Henry Cliff (40%) Jay (30%)
Capital Interests 20,000 30,000 40,000
Divide by P/L % 40% 30% 30%
Loss Absorption Abilities 50,000 100,000 133,333
Priority No. 1 -33,333
50,000 100,000 100,000
Priority No. 2 -50,000 -50,000 15,000
50,000 50,000 50,000

January February March

Cash 40,000 40,000 40,000
Proceeds 17,500 47,500 72,500
Asset Realization 57,500 87,500 112,500
Payment of Liabilities -16,000 -26,000 -40,000
Cash Withheld - Liabilities -24,000 -14,000
Liquidation Expense 5,000 -10,000 -17,500
Cash Withheld - Liq. Expense -2,500 -2,000
Payment to partners -10,000 -35,000
Cash distributed to partners 10,000 25,000 20,000

Cliff 6,000
Jay 12,500 4,500
Henry 10,000 12,500 4,500

January Cash Distribution 10,000

February Cash Distribution 25,000
March Cash Distribution 5,000
Total Cash Distributed 40,000

Henry's share in March 4,500

Share from March Distribution
5,000 x 30% 2,500
Total Cash received by Henry 7,000
JANE (40%)

418,000
-8,000 -20,000

410,000
-46,000
364,000

410,000
-358,960

-5,040

46,000

Henry (30%) TOTAL

10,000 10,000
15,000 30,000
40,000