PE 12-5B Liquidating partnerships

Prior to liquidating their partnership, Quinn and Kestor had capital accounts of $200,000 and $120,000, respectively. Prior to liquidation, the partnership had no cash assets other than what was realized from the sale of assets. These partnership assets were sold for $240,000. The partnership had $30,000 of liabilities. Quinn and Kestor share income and losses equally. Determine the amount received by Quinn as a final distribution from liquidation of the partnership.

Answer:

Quinn’s equity prior to liquidation......................................   $200,000  Realization of asset sales.................................................... $240,000 Book value of assets ($200,000 + $120,000 + $30,000) .....  350,000 Loss on liquidation .............................................................. $110,000 Quinn’s share of loss (50% × $110,000).............................    (55,000) Quinn’s cash distribution....................................................   $145,000 

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