Problem $1($Recommended: review slides $6-23)$

The partnership of Folly and Frill is in the process of liquidation. On January $1,2025,$ the books show account balances as follows:

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Assets

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Liabilities and Capital

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Cash

$10,000$

Accounts Payable

$15,000$

Accounts Receivable

$25,000$

Folly Capital

$40,000$

Lumber Inventory

$40,000$

Frill Capital

$20,000$

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On January $10,2025,$ the lumber inventory is sold for $$25,000.$ During January, Accounts Receivable of $$21,000$ are collected. No further collections on the receivables are expected. Profits are shared $60\%$ to Folly and $40\%$ to Frill.

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$1.$ Compute the final distribution to Folly.

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$$Problem $2($Recommended: review slides $24-32)$

Fred, Ethel, and Lucy have decided to liquidate their partnership. Account balances on January $1,2025$ are as follows:

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Assets

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Liabilities and Capital

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Cash

$120,000$

Accounts Payable

$40,000$

Other assets

$120,000$

Fred Capital $(30\%)$

$85,000$

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$240,000$

Ethel Capital $(30\%)$

$25,000$

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Lucy Capital $(40\%)$

$90,000$

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$240,000$

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The partners agree to keep a $$10,000$ contingency fund and to distribute available cash immediately.

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$1.$ Compute the amount of cash that should be paid to Fred.

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$2.$ Compute the amount of cash that should be paid to Ethel.

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Computetheamountof cashthatshould bepaidtoLucy