Question

Prior to liquidating their partnership, Joyce and Xi had capital accounts of $50,000 and $105,000, 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 $190,000. The partnership had $10,000 of liabilities. Joyce and Xi share income and losses equally.

Answer 1

This question deals with the dissolution of a partnership and the division of assets after liquidating the partnership's assets and settling its debts.

Step-by-step explanation:

The subject matter of this question concerns the liquidation of a partnership, specifically relating to the financial accounting aspects of distributing cash after assets are sold and liabilities settled. Joyce and Xi are partners with different capital account balances, and the question involves calculations related to the sale of partnership assets, settling liabilities, and distributing the remaining cash to the partners according to their capital accounts and agreed profit and loss sharing ratios.

To illustrate, if Joyce and Xi's partnership sold assets for $190,000 and had to settle $10,000 of liabilities, they would then have $180,000 in cash to distribute. If they share income and losses equally, they would split the remaining balance in half after paying off their capital accounts.

Answer 2

Joyce cash distribution = $262500

Step-by-step explanation:

given data

Joyce capital = $50,000

Xi capital = $105,000

liabilities = $10,000

assets sold = $190,000

to find out

we consider Determine the amount received by Joyce as a final distribution from liquidation of the partnership

solution

we carrying value of non-cash asset prior to liquidation is

value of non-cash asset prior to liquidation = $50,0000 + $105,000 + $10,000

value of non-cash asset prior to liquidation = $615000

so Profit on Liquidation is = value of non-cash asset prior to liquidation - Sale of Asset

Profit on Liquidation is = $615000 - $190,000

Profit on Liquidation is = $ 425000

and here since

Joyce and Xi share income and losses equally

so Joyce share of profit will be

Joyce share of profit = 50% × $ 425000

Joyce share of profit = $212500

and

so Joyce cash distribution will be

Joyce cash distribution = Joyce share of profit + Joyce capital

Joyce cash distribution = $212500 + $50,000

Joyce cash distribution = $262500