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    Cash distribution in partnership liquidation

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    Chapter 10

    PROBLEM ONE
    The Keaton, Lewis, and Meador partnership had the following balance sheet just before
    entering liquidation:

    CASH 10000 LIABILITIES 130000
    NON CASH ASSETS 300000 KEATON CAPITAL 60000
    LEWIS CAPITAL 40000
    MEADOR CAPITAL 80000
    TOTALS 310000 TOTALS 310000

    Keaton, Lewis, and Meador share profits and losses in a ratio of 2:4:4. Noncash assets were
    sold for $180,000. Liquidation expenses were $12,000.

    PART A:
    Assume that Lewis was personally insolvent and could not contribute any assets to the
    partnership, while Keaton and Meador were both solvent. What amount of cash would
    Keaton and Meador have received from the distribution of partnership assets?

    PART B:
    Assume that Keaton was personally insolvent with assets of $8,000 and liabilities of $60,000.
    Lewis and Keaton were both solvent and able to cover deficits in their capital accounts, if any.
    What amount of cash could Keaton's personal creditors have expected to receive
    from partnership assets?

    PROBLEM TWO (EASY)
    The Henry, Isaac, and Jacobs partnership was about to enter liquidation with the following
    account balances:
    CASH 90000 LIABILITIES 60000
    NON CASH ASSETS 300000 80000
    110000
    140000
    TOTALS 390000 TOTALS 390000

    Estimated expenses of liquidation were $10,000. Henry, Isaac, and Jacobs shared
    profits and losses in a ratio of 2:4:4.

    What amount of safe cash was available, based on the above information?

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