EX 12-23 Liquidating partnerships—capital deficiency

Arnold, Peters, and Suzuki are partners sharing income 3:2:1. After the firm’s loss from liquidation is distributed, the capital account balances were: Arnold, $18,000 Dr.; Peters, $75,000 Cr.; and Suzuki, $55,000 Cr. If Arnold is personally bankrupt and unable to pay any of the $18,000, what will be the amount of cash received by Peters and Suzuki upon liquidation?

Answer:

  Arnold   Peters   Suzuki   Capital balances after realization.............. $(18,000) $ 75,000 $55,000 Distribution of partner deficiency.............  18,000  (12,000)1  (6,000)2 Capital balances after deficiency  distribution........................................... $ 0 $ 63,000 $49,000  1$18,000 × 2/3 2$18,000 × 1/3  

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