Problem: On March 1 2009, the ABC partnership decides to complete a lump-sum liquidation as soon as possible. The partnership balance sheet prepared on March 1appears below:
cash 50,000 Account Pay 200,0000
Account Receivable 60,000 due to partner A 30,000
Inventory 100,000 A, capital(30%) 350,000
investments 40,000 B, Capital (40%) 80,000
plant and equip. 650,000 C, Capital (30%) 240,000
total 900,000 total liability n capital 900,000
The partners share profits and losses in the ratio of 3:4:3. Partner B is personally insolvent, but partners A and C have sufficient personal assets to satisfy any capital deficits. On march 15, 2009, the non cash assets are sold for 550,000. Lump sum payments are made to the partners on March 16, immediately after the creditors have been paid.