Distribution of cash upon liquidation
Lyle and Fisher are partners, sharing gains and losses equally. They decide to terminate their partnership. Prior to realization, their capital balances are $15,000 and $7,000, respectively. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $16,000.
a. What is the amount of a gain or loss on realization?
b. How should the gain or loss be divided between Lyle and Fisher?
c. How should the cash be divided between Lyle and Fisher?