A B and C plan to liquidate their Ocean Breeze Pool and Spa business. They have always shared profit and losses in a ratio of :: ratio, and on the day of liquidation their balance sheet appeared as follows:

Ocean Breeze Pool and Spa

Balance Sheet as at June

$

$

Fixed Assets

Machinery net of depreciation

Current Assets

Cash

Less: Current liabilities

Accounts payable

Net current assets

Capital:

A

B

C

Required

Show the disposal, the gain or loss allocation, and the final distribution of the cash in each of the following independent cases assuming that:

a The machinery is sold for $

b The machinery is sold for $

c The machinery is sold for $ and any partners with resulting deficits can and do pay in the amount of their deficits.

d The machinery is sold for $ and the partners have assets other than those invested in the business.

Answer rating: 100% (QA)

To determine the disposal gain or loss allocation and the final distribution of cash for each case o... View the full answer