E16-8 Cash Distribution PlanAdams, peters, and Blake share Profits and losses for their APB Partnership in a ratio of 2:3:5.When they decide to liquidate, the balance sheet is as follows:Assets Liabilities and EquitiesCash $40,000 Liabilities $50,000 Adams, Loan 10,000 Adams, Capital 55,000Other Assets 200,000 Peters, Capital 75,000Blake, Capital 70,000Total Assets $250,000 Total Liabilities and Equities$250,000 Liquidation expenses are expected to be negligible, No interest accrues on loans with partners after termination of the business.Required: Prepare a cash distribution plan for the APB Partnership.Solution:Assumption: Other assets are assumed to be sold at the book value of $200,000 as its market or sale value is not given.CASH DISTRIBUTION PLANCash Adams,Otherassets Liabilities Adams, Peters, Blake,Loan Capital Capital CapitalBalance before liquidation $ 40,000 $ 10,000 $ 200,000 $ 50,000 $ 55,000 $ 75,000 $ 70,000 Sale of other assets $ 200,000 $ $ (200,000) $ $ $ $ $ 240,000 $ 10,000 $ - $ 50,000 $ 55,000 $ 75,000 $ 70,000 Settlement of liabilities $ (50,000) $ $ $ (50,000) $ $ $ $ 190,000 $ 10,000 $ - $ - $ 55,000 $ 75,000 $ 70,000 Adams loan debited to capital $ $ (10,000) $ $ $ (10,000) $ $ $ 190,000 $ - $ - $ - $ 45,000 $ 75,000 $ 70,000 Balance cash distributed $ (190,000) $ (45,000) $ (75,000) $ (70,000)Ending balances $ - $ - $ - $ - $ - $ - $
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