The partnership of Telliher, Bachra, and Lang has experienced operating losses for three consecutive years. The partners, who have shared profits and losses in the ratio of Thea Telliher, 60 percent, Denis Bachra, 20 percent, and Alan Lang, 20 percent, are considering the liquidation of the business. They ask you to analyze the effects of liquidation under various possibilities about the sale of the noncash assets. None of the partners have personal assets if they go into a deficit financial position. They present the following partnership balance sheet amounts at December 31, 2014:

Required
1. Prepare a summary of liquidation transactions (as illustrated in Exhibits 12-5 or 12-6) for each of the following situations:
a. The noncash assets are sold for $36,300.
b. The noncash assets are sold for $27,600.
2. What legal recourse do the remaining partners have to be reimbursed for deficit balances?
3. Suppose, after allocating Telliher's deficit balance, Lang now has a deficit balance. How would the partnership deal with this deficiency?

Transcribed Image Text:

28,350 46,600 30,000 20,600 $ 6,750 Liabilities Cash Noncash assets 118,800 Thea Telliher, capital Denis Bachra, capital Alan Lnigs cappial Total liabilities Total assets 125,550 and capital $125,550