Liquidation of partnership refers to the shutting of the firm i.e. putting end to the partnership business. This can be due to the death of any partner or on the closure of the business or any other reason. Sometimes, the liquidation takes place to initialize a new business entity with new partners. The contribution of A towards the partnership liabilities in case of selling all assets for $ 135 , 000 and after contribution of personal assets of partners having deficit capital balance towards those deficits considering the information of Case B.

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Answer 1

Question

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

Chapter 14, Problem 9.4E

To determine

Concept Introduction:

Liquidation of partnership refers to the shutting of the firm i.e. putting end to the partnership business. This can be due to the death of any partner or on the closure of the business or any other reason. Sometimes, the liquidation takes place to initialize a new business entity with new partners.

The contribution of A towards the partnership liabilities in case of selling all assets for $135,000 and after contribution of personal assets of partners having deficit capital balance towards those deficits considering the information of Case B.

Expert Solution & Answer

Answer to Problem 9.4E

The partner A’s personal creditors will receive from the interest of A in partnership an amount of $3,200 only.

Explanation of Solution

The partnership given in the question has three partners who are entitled to the equal profit sharing ratio. The capital balances of the three partners are:

Partner A has $34,000 , Partner B has ($15,000) , and Partner C has $11,000 .

The assets valued at $180,000 for $135,000 considering the information of Case B at the time of liquidation of the partnership.

Computation of capital surplus or deficit of partners at the time of liquidation:

Particulars	Cash	Other Assets	Liabilities	Capital A	Capital B	Capital C
Opening balance	$0	$180,000	$150,000	$34,000	($15,000)	$11,000
Sale of assets	$135,000	($180,000)	$0	($15,000)	($15,000)	($15,000)
Payment of liabilities	($135,000)		($135,000)
Balances	$0	$0	$15,000	$19,000	($30,000)	($4,000)
Contribution by Partner B and C	$18,200				$15,000	$3,200
Payment of liabilities	($15,000)		($15,000)
Balances	$3,200	$0	$0	$19,000	($15,000)	($800)

Now, the table for computing the amount of contribution by partner B against the deficit amount is as follows:

Particulars	Amount	% of total	Personal assets allocation
Partnership deficit	$30,000	33%	$15,000
Personal Liabilities	$60,000	67%	$30,000
Total	$90,000		$45,000

Hence, the amount of contribution by partner B towards capital deficit is $15,000 .

The table for computing the amount of contribution by partner C against the deficit amount is as follows:

Particulars	Amount	% of total	Personal assets allocation
Partnership deficit	$4,000	10%	$3,200
Personal Liabilities	$36,000	90%	$28,800
Total	$40,000		$32,000

Hence, the amount of contribution by partner C towards capital deficit is $3,200 .

As after compensating the deficit capital balances of partner B i.e. ($15,000) and partner C i.e. ($800) with the surplus balance of partner A i.e. $19,000 , the balance remaining incapital with A is $3,200 which is only available for the personal creditors of partner A.

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Students have asked these similar questions

In the liquidation of a partnership, why might a partner be concerned that a fellow partner has a deficit net capital balance, and how might such a deficit be eliminated?

In the liquidation of a partnership, a loan payable to a partner: a) May be offset against that partners’ capital account balance before liquidation commences. b) Will not advance the time of payment to that partner during the liquidation. c) Has the same priority as amounts payable to outside creditors of the partnership. d) Must be closed to that partners’ drawing account.

What is the proper disposition of a partnership loan that was made from a partner who has a debit balance in the capital account? A. The loan is ignored in liquidation. B. The loan is offset against the debit balance in the capital account. C. The loan is charged off to the capital accounts of all the partners in their profit and loss sharing ratios. D. The loan is held for payment after all other capital accounts are covered.

Answer 2

Question

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

Chapter 14, Problem 9.4E

To determine

Concept Introduction:

Liquidation of partnership refers to the shutting of the firm i.e. putting end to the partnership business. This can be due to the death of any partner or on the closure of the business or any other reason. Sometimes, the liquidation takes place to initialize a new business entity with new partners.

The contribution of A towards the partnership liabilities in case of selling all assets for $135,000 and after contribution of personal assets of partners having deficit capital balance towards those deficits considering the information of Case B.

Expert Solution & Answer

Answer to Problem 9.4E

The partner A’s personal creditors will receive from the interest of A in partnership an amount of $3,200 only.

Explanation of Solution

The partnership given in the question has three partners who are entitled to the equal profit sharing ratio. The capital balances of the three partners are:

Partner A has $34,000 , Partner B has ($15,000) , and Partner C has $11,000 .

The assets valued at $180,000 for $135,000 considering the information of Case B at the time of liquidation of the partnership.

Computation of capital surplus or deficit of partners at the time of liquidation:

Particulars	Cash	Other Assets	Liabilities	Capital A	Capital B	Capital C
Opening balance	$0	$180,000	$150,000	$34,000	($15,000)	$11,000
Sale of assets	$135,000	($180,000)	$0	($15,000)	($15,000)	($15,000)
Payment of liabilities	($135,000)		($135,000)
Balances	$0	$0	$15,000	$19,000	($30,000)	($4,000)
Contribution by Partner B and C	$18,200				$15,000	$3,200
Payment of liabilities	($15,000)		($15,000)
Balances	$3,200	$0	$0	$19,000	($15,000)	($800)

Now, the table for computing the amount of contribution by partner B against the deficit amount is as follows:

Particulars	Amount	% of total	Personal assets allocation
Partnership deficit	$30,000	33%	$15,000
Personal Liabilities	$60,000	67%	$30,000
Total	$90,000		$45,000

Hence, the amount of contribution by partner B towards capital deficit is $15,000 .

The table for computing the amount of contribution by partner C against the deficit amount is as follows:

Particulars	Amount	% of total	Personal assets allocation
Partnership deficit	$4,000	10%	$3,200
Personal Liabilities	$36,000	90%	$28,800
Total	$40,000		$32,000

Hence, the amount of contribution by partner C towards capital deficit is $3,200 .

As after compensating the deficit capital balances of partner B i.e. ($15,000) and partner C i.e. ($800) with the surplus balance of partner A i.e. $19,000 , the balance remaining incapital with A is $3,200 which is only available for the personal creditors of partner A.

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Answer 3

Question

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

Chapter 14, Problem 9.4E

To determine

Concept Introduction:

Liquidation of partnership refers to the shutting of the firm i.e. putting end to the partnership business. This can be due to the death of any partner or on the closure of the business or any other reason. Sometimes, the liquidation takes place to initialize a new business entity with new partners.

The contribution of A towards the partnership liabilities in case of selling all assets for $135,000 and after contribution of personal assets of partners having deficit capital balance towards those deficits considering the information of Case B.

Expert Solution & Answer

Answer to Problem 9.4E

The partner A’s personal creditors will receive from the interest of A in partnership an amount of $3,200 only.

Explanation of Solution

The partnership given in the question has three partners who are entitled to the equal profit sharing ratio. The capital balances of the three partners are:

Partner A has $34,000 , Partner B has ($15,000) , and Partner C has $11,000 .

The assets valued at $180,000 for $135,000 considering the information of Case B at the time of liquidation of the partnership.

Computation of capital surplus or deficit of partners at the time of liquidation:

Particulars	Cash	Other Assets	Liabilities	Capital A	Capital B	Capital C
Opening balance	$0	$180,000	$150,000	$34,000	($15,000)	$11,000
Sale of assets	$135,000	($180,000)	$0	($15,000)	($15,000)	($15,000)
Payment of liabilities	($135,000)		($135,000)
Balances	$0	$0	$15,000	$19,000	($30,000)	($4,000)
Contribution by Partner B and C	$18,200				$15,000	$3,200
Payment of liabilities	($15,000)		($15,000)
Balances	$3,200	$0	$0	$19,000	($15,000)	($800)

Now, the table for computing the amount of contribution by partner B against the deficit amount is as follows:

Particulars	Amount	% of total	Personal assets allocation
Partnership deficit	$30,000	33%	$15,000
Personal Liabilities	$60,000	67%	$30,000
Total	$90,000		$45,000

Hence, the amount of contribution by partner B towards capital deficit is $15,000 .

The table for computing the amount of contribution by partner C against the deficit amount is as follows:

Particulars	Amount	% of total	Personal assets allocation
Partnership deficit	$4,000	10%	$3,200
Personal Liabilities	$36,000	90%	$28,800
Total	$40,000		$32,000

Hence, the amount of contribution by partner C towards capital deficit is $3,200 .

As after compensating the deficit capital balances of partner B i.e. ($15,000) and partner C i.e. ($800) with the surplus balance of partner A i.e. $19,000 , the balance remaining incapital with A is $3,200 which is only available for the personal creditors of partner A.

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Answer 4

Question

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

Chapter 14, Problem 9.4E

To determine

Concept Introduction:

Liquidation of partnership refers to the shutting of the firm i.e. putting end to the partnership business. This can be due to the death of any partner or on the closure of the business or any other reason. Sometimes, the liquidation takes place to initialize a new business entity with new partners.

The contribution of A towards the partnership liabilities in case of selling all assets for $135,000 and after contribution of personal assets of partners having deficit capital balance towards those deficits considering the information of Case B.

Expert Solution & Answer

Answer to Problem 9.4E

The partner A’s personal creditors will receive from the interest of A in partnership an amount of $3,200 only.

Explanation of Solution

The partnership given in the question has three partners who are entitled to the equal profit sharing ratio. The capital balances of the three partners are:

Partner A has $34,000 , Partner B has ($15,000) , and Partner C has $11,000 .

The assets valued at $180,000 for $135,000 considering the information of Case B at the time of liquidation of the partnership.

Computation of capital surplus or deficit of partners at the time of liquidation:

Particulars	Cash	Other Assets	Liabilities	Capital A	Capital B	Capital C
Opening balance	$0	$180,000	$150,000	$34,000	($15,000)	$11,000
Sale of assets	$135,000	($180,000)	$0	($15,000)	($15,000)	($15,000)
Payment of liabilities	($135,000)		($135,000)
Balances	$0	$0	$15,000	$19,000	($30,000)	($4,000)
Contribution by Partner B and C	$18,200				$15,000	$3,200
Payment of liabilities	($15,000)		($15,000)
Balances	$3,200	$0	$0	$19,000	($15,000)	($800)

Now, the table for computing the amount of contribution by partner B against the deficit amount is as follows:

Particulars	Amount	% of total	Personal assets allocation
Partnership deficit	$30,000	33%	$15,000
Personal Liabilities	$60,000	67%	$30,000
Total	$90,000		$45,000

Hence, the amount of contribution by partner B towards capital deficit is $15,000 .

The table for computing the amount of contribution by partner C against the deficit amount is as follows:

Particulars	Amount	% of total	Personal assets allocation
Partnership deficit	$4,000	10%	$3,200
Personal Liabilities	$36,000	90%	$28,800
Total	$40,000		$32,000

Hence, the amount of contribution by partner C towards capital deficit is $3,200 .

As after compensating the deficit capital balances of partner B i.e. ($15,000) and partner C i.e. ($800) with the surplus balance of partner A i.e. $19,000 , the balance remaining incapital with A is $3,200 which is only available for the personal creditors of partner A.

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Answer 5

Chapter 14, Problem 9.4E

To determine

Concept Introduction:

Liquidation of partnership refers to the shutting of the firm i.e. putting end to the partnership business. This can be due to the death of any partner or on the closure of the business or any other reason. Sometimes, the liquidation takes place to initialize a new business entity with new partners.

The contribution of A towards the partnership liabilities in case of selling all assets for $135,000 and after contribution of personal assets of partners having deficit capital balance towards those deficits considering the information of Case B.

Expert Solution & Answer

Answer to Problem 9.4E

The partner A’s personal creditors will receive from the interest of A in partnership an amount of $3,200 only.

Explanation of Solution

The partnership given in the question has three partners who are entitled to the equal profit sharing ratio. The capital balances of the three partners are:

Partner A has $34,000 , Partner B has ($15,000) , and Partner C has $11,000 .

The assets valued at $180,000 for $135,000 considering the information of Case B at the time of liquidation of the partnership.

Computation of capital surplus or deficit of partners at the time of liquidation:

Particulars	Cash	Other Assets	Liabilities	Capital A	Capital B	Capital C
Opening balance	$0	$180,000	$150,000	$34,000	($15,000)	$11,000
Sale of assets	$135,000	($180,000)	$0	($15,000)	($15,000)	($15,000)
Payment of liabilities	($135,000)		($135,000)
Balances	$0	$0	$15,000	$19,000	($30,000)	($4,000)
Contribution by Partner B and C	$18,200				$15,000	$3,200
Payment of liabilities	($15,000)		($15,000)
Balances	$3,200	$0	$0	$19,000	($15,000)	($800)

Now, the table for computing the amount of contribution by partner B against the deficit amount is as follows:

Particulars	Amount	% of total	Personal assets allocation
Partnership deficit	$30,000	33%	$15,000
Personal Liabilities	$60,000	67%	$30,000
Total	$90,000		$45,000

Hence, the amount of contribution by partner B towards capital deficit is $15,000 .

The table for computing the amount of contribution by partner C against the deficit amount is as follows:

Particulars	Amount	% of total	Personal assets allocation
Partnership deficit	$4,000	10%	$3,200
Personal Liabilities	$36,000	90%	$28,800
Total	$40,000		$32,000

Hence, the amount of contribution by partner C towards capital deficit is $3,200 .

As after compensating the deficit capital balances of partner B i.e. ($15,000) and partner C i.e. ($800) with the surplus balance of partner A i.e. $19,000 , the balance remaining incapital with A is $3,200 which is only available for the personal creditors of partner A.

Answer 6

Chapter 14, Problem 9.4E

To determine

Concept Introduction:

Liquidation of partnership refers to the shutting of the firm i.e. putting end to the partnership business. This can be due to the death of any partner or on the closure of the business or any other reason. Sometimes, the liquidation takes place to initialize a new business entity with new partners.

The contribution of A towards the partnership liabilities in case of selling all assets for $135,000 and after contribution of personal assets of partners having deficit capital balance towards those deficits considering the information of Case B.

Expert Solution & Answer

Answer to Problem 9.4E

The partner A’s personal creditors will receive from the interest of A in partnership an amount of $3,200 only.

Explanation of Solution

The partnership given in the question has three partners who are entitled to the equal profit sharing ratio. The capital balances of the three partners are:

Partner A has $34,000 , Partner B has ($15,000) , and Partner C has $11,000 .

The assets valued at $180,000 for $135,000 considering the information of Case B at the time of liquidation of the partnership.

Computation of capital surplus or deficit of partners at the time of liquidation:

Particulars	Cash	Other Assets	Liabilities	Capital A	Capital B	Capital C
Opening balance	$0	$180,000	$150,000	$34,000	($15,000)	$11,000
Sale of assets	$135,000	($180,000)	$0	($15,000)	($15,000)	($15,000)
Payment of liabilities	($135,000)		($135,000)
Balances	$0	$0	$15,000	$19,000	($30,000)	($4,000)
Contribution by Partner B and C	$18,200				$15,000	$3,200
Payment of liabilities	($15,000)		($15,000)
Balances	$3,200	$0	$0	$19,000	($15,000)	($800)

Now, the table for computing the amount of contribution by partner B against the deficit amount is as follows:

Particulars	Amount	% of total	Personal assets allocation
Partnership deficit	$30,000	33%	$15,000
Personal Liabilities	$60,000	67%	$30,000
Total	$90,000		$45,000

Hence, the amount of contribution by partner B towards capital deficit is $15,000 .

The table for computing the amount of contribution by partner C against the deficit amount is as follows:

Particulars	Amount	% of total	Personal assets allocation
Partnership deficit	$4,000	10%	$3,200
Personal Liabilities	$36,000	90%	$28,800
Total	$40,000		$32,000

Hence, the amount of contribution by partner C towards capital deficit is $3,200 .

As after compensating the deficit capital balances of partner B i.e. ($15,000) and partner C i.e. ($800) with the surplus balance of partner A i.e. $19,000 , the balance remaining incapital with A is $3,200 which is only available for the personal creditors of partner A.

Answer 7

Chapter 14, Problem 9.4E

To determine

Concept Introduction:

Liquidation of partnership refers to the shutting of the firm i.e. putting end to the partnership business. This can be due to the death of any partner or on the closure of the business or any other reason. Sometimes, the liquidation takes place to initialize a new business entity with new partners.

The contribution of A towards the partnership liabilities in case of selling all assets for $135,000 and after contribution of personal assets of partners having deficit capital balance towards those deficits considering the information of Case B.

Answer 8

Expert Solution & Answer

Answer to Problem 9.4E

The partner A’s personal creditors will receive from the interest of A in partnership an amount of $3,200 only.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

The partnership given in the question has three partners who are entitled to the equal profit sharing ratio. The capital balances of the three partners are:

Partner A has $34,000 , Partner B has ($15,000) , and Partner C has $11,000 .

The assets valued at $180,000 for $135,000 considering the information of Case B at the time of liquidation of the partnership.

Computation of capital surplus or deficit of partners at the time of liquidation:

Particulars	Cash	Other Assets	Liabilities	Capital A	Capital B	Capital C
Opening balance	$0	$180,000	$150,000	$34,000	($15,000)	$11,000
Sale of assets	$135,000	($180,000)	$0	($15,000)	($15,000)	($15,000)
Payment of liabilities	($135,000)		($135,000)
Balances	$0	$0	$15,000	$19,000	($30,000)	($4,000)
Contribution by Partner B and C	$18,200				$15,000	$3,200
Payment of liabilities	($15,000)		($15,000)
Balances	$3,200	$0	$0	$19,000	($15,000)	($800)

Now, the table for computing the amount of contribution by partner B against the deficit amount is as follows:

Particulars	Amount	% of total	Personal assets allocation
Partnership deficit	$30,000	33%	$15,000
Personal Liabilities	$60,000	67%	$30,000
Total	$90,000		$45,000

Hence, the amount of contribution by partner B towards capital deficit is $15,000 .

The table for computing the amount of contribution by partner C against the deficit amount is as follows:

Particulars	Amount	% of total	Personal assets allocation
Partnership deficit	$4,000	10%	$3,200
Personal Liabilities	$36,000	90%	$28,800
Total	$40,000		$32,000

Hence, the amount of contribution by partner C towards capital deficit is $3,200 .

As after compensating the deficit capital balances of partner B i.e. ($15,000) and partner C i.e. ($800) with the surplus balance of partner A i.e. $19,000 , the balance remaining incapital with A is $3,200 which is only available for the personal creditors of partner A.

Answer 12

Ch. 14 - Prob. 1UTI Ch. 14 - Prob. 2UTI Ch. 14 - Prob. 3UTI Ch. 14 - Prob. 4UTI Ch. 14 - Prob. 2E Ch. 14 - Prob. 3E Ch. 14 - Prob. 4.1E Ch. 14 - Prob. 4.2E Ch. 14 - Prob. 4.3E Ch. 14 - Prob. 4.4E

Answer to Problem 9.4E

Explanation of Solution

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