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    Lump sum liquidation

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    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.

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    Solution Summary

    The expert examines lump-sum liquidation for ABC partnerships.