Mary, Paula, and Ray have operated a retail store for 20 years. The partners share profits and

Question:

Mary, Paula, and Ray have operated a retail store for 20 years. The partners share profits and losses in the ratio of 4:3:3, respectively. The partnership is unable to meet its obligations and the partners decide to liquidate the partnership. The firmâ€™s balance sheet just before the partners sell the other assets for $20,000 is as follows.

After the sale of the noncash assets, the personal assets and liabilities of each partner are determined to be the following:

The partnership operates in a state that has adopted the Uniform Partnership Act.

Required:
A. Determine the amount of cash each partner will receive in liquidation and how much cash each partner must contribute to the firm, given their personal positions.
B. Determine the amounts that the personal creditors will receive from personal assets and any distribution from thepartnership.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most... Liquidation
Liquidation in finance and economics is the process of bringing a business to an end and distributing its assets to claimants. It is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations when they are due.... Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...