Question

Harding, Jones, and Sandy, a partnership, is in the process of liquidating. The partners have the following capital account balances; $24,000, $24,000, and ($9,000) respectively. The partners share all profits and losses 16%, 48%, and 36%, respectively. Sandy has indicated that the ($9,000) deficit will be covered with a forthcoming contribution. The remaining partners have requested an immediate distribution of $20,000 in cash that is available. How should this cash be distributed?

Answer 1

Answer: Cash to be distributed to Harding = $17,000, Jones = $3,000

Step-by-step explanation:

24,000+24,000+20,000=68,000

16%/(16%+48%)=25%

48%/(16%+48%)=75%

68,000*25%=17,000

68,000*75%=51,000

24,000+24,000=48,000

51,000-48,000=3,000

Answer 2

Answer: Cash to be distributed to Harding = $ 17000, Jones = $ 3000

Step-by-step explanation:

It has been indicated that the ($9,000) deficit will be covered with a forthcoming contribution

∴ The Remaining Capital Balance is = (24000 + 24000) = $48000

∵Total cash Available = $20000

Loss = 48000 - 20000 = $ 28000

Loss will be shared between Harding & Jones in ratio = 16:48

∴ Harding Capital balance =
`((24000 - 28000)*16)/(16+48)` = $ 17000

∴ Jones Capital balance =
`((24000 - 28000)*48)/(16+48)` = $ 3000

Cash will be Distributed in their capital balance ratio

Therefore,

Cash to be distributed to Harding = $ 17000, Jones = $ 3000