EX 12-20 Distribution of cash upon liquidation

Daniel Mason and Srini Kumar, with capital balances of $34,000 and $36,000, respectively, decide to liquidate their partnership. After selling the noncash assets and paying the liabilities, there is $82,000 of cash remaining. If the partners share income and losses equally, how should the cash be distributed?

Answer:

Mason Kumar  Total   Capital balances before realization .............. $34,000 $36,000 $70,000 Division of gain on sale of noncash assets  [($82,000 – $70,000)/2]..............................  6,000  6,000 Capital balances after realization.................. $40,000 $42,000 Cash distributed to partners.........................  40,000  42,000 Final balances ................................................ $ 0 $ 0 

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