The balance sheet of Rogers, Dennis & Berry LLP prior to liquidation included the following: Cash$40,000Noncash assets 80,000Liabilities 20,000Loan Payable to Rogers 10,000Rogers, Capital 35,000Dennis, Capital 30,000Berry, Capital 25,000??The three partners shared net income and losses in a 5:3:2 ratio, respectively. Noncash assets were sold for $60,000. Creditors were paid in full, partners were paid $35,000, and the balance of cash was retained pending future developments.?Determine the cash to be retained and prepare a schedule to distribute $35,000 cash to the partners.
What will be an ideal response?
Cash balance = $40,000 + sale noncash assets
$60,000 - paid liabilities $20,000 - partners paid
$35,000 = $45,000 ending balance retained for future expenses.
Distribution of $35,000:
| Rogers | Dennis | Berry | |||||||
| Capital (including Rogers' loan of $10,000) before liquidation | $ | 45,000 | $ | 30,000 | $ | 25,000 | |||
| Actual loss on realization of assets | (10,000 | ) | (6,000 | ) | (4,000 | ) | |||
| Balances | $ | 35,000 | $ | 24,000 | $ | 21,000 | |||
| Retained cash for future expenses $45,000 | (22,500 | ) | (13,500 | ) | (9,000 | ) | |||
| Cash payments $35,000 | $ | 12,500 | $ | 10,500 | $ | 12,000 | |||
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