[WinwinCPA]

Does anyone know how to solve this problem? Thank you so much!

A local partnership was considering the possibility of liquidation since one of the partners (Ding) was

personally insolvent. Capital balances at that time were as follows. Profits and losses were divided on a

4:2:2:2 basis, respectively.

Creditors of partner Ding filed a $25,000 claim against the partnership’s assets. At that time, the

partnership held noncash assets reported at $360,000 and liabilities of $120,000. There was no cash on

hand at the time.

Ding, Capital $60,000

Laurel, capital $67,000

Ezzard, capital $17,000

Tillman, capital 96,600

If the assets could be sold for $228,000, what is the minimum amount that Laurel’s creditors would have

received?

A. $36,000.

B. $0.

C. $2,500.

D. $38,250.

E. $67,250.

the correct answer is D: 38,250

[Tncincy]

Working on it :-))

It begins with a 75
Been here too long as a cheerleader....ready to pass

[Tncincy]

Working on it :-))

It begins with a 75
Been here too long as a cheerleader....ready to pass

[Dan T]

First allocate the $228,000 sale to Laurel using the 4:2:2:2.. Her piece is $38,000. Subtract from her capital (67,000-38,000) is 29,000. Then 1/4 of the 25000 and 12000 loss on sale (360,000-120,000-228,000).

1/4 (37,000) 9250

Laurels piece 29000

38250

AUD - 75 ☺
FAR - 65, 71, 70, 77 ☺
BEC - 80 ☺
REG - 73, 66, 79 ☺ 2/28/15

Done!

[Dan T]

First allocate the $228,000 sale to Laurel using the 4:2:2:2.. Her piece is $38,000. Subtract from her capital (67,000-38,000) is 29,000. Then 1/4 of the 25000 and 12000 loss on sale (360,000-120,000-228,000).

1/4 (37,000) 9250

Laurels piece 29000

38250

AUD - 75 ☺
FAR - 65, 71, 70, 77 ☺
BEC - 80 ☺
REG - 73, 66, 79 ☺ 2/28/15

Done!

[MustPass1988]

^^ not following this explanation for some reason. Becker explains this concept by allocating the loss of the sale of assets (so, 228-360) to the partners using their Profit Loss allocation.

AUD: PASSED [81]; Expired, retaking August 23rd
BEC: PASSED [83]; Expired, retaking July 11th
REG: PASSED [83]
FAR: FAILED [64]; Retaking May 23rd

[MustPass1988]

^^ not following this explanation for some reason. Becker explains this concept by allocating the loss of the sale of assets (so, 228-360) to the partners using their Profit Loss allocation.

AUD: PASSED [81]; Expired, retaking August 23rd
BEC: PASSED [83]; Expired, retaking July 11th
REG: PASSED [83]
FAR: FAILED [64]; Retaking May 23rd

[NYCaccountant]

Begining Capital % share of Share of loss Capital balance Allocation Ending capital

losses after loss of Ezzard balance

DING 60,000 40% 52,800 7,200 – 4,700 2,500

Laurel 67,000 20% 26,400 40,600 – 2,350 38,250

Ezzard 17,000 20% 26,400 -9,400 0 0

Tillman 96,600 20% 26,400 70,200 – 2,350 67,850

Can't have negative balance, so need to allocate 9,400 to other partners based on new ownership percentage.

Assets book value 360,000

Fair value 228,000

Loss = 360,000-228,000=132,000

Whoa, lol totally did not come out properly format wise.

FAR - 93
REG - 87
BEC - 84!!!!
AUD - 99!!!!!! CPA exam complete.

[NYCaccountant]

Begining Capital % share of Share of loss Capital balance Allocation Ending capital

losses after loss of Ezzard balance

DING 60,000 40% 52,800 7,200 – 4,700 2,500

Laurel 67,000 20% 26,400 40,600 – 2,350 38,250

Ezzard 17,000 20% 26,400 -9,400 0 0

Tillman 96,600 20% 26,400 70,200 – 2,350 67,850

Can't have negative balance, so need to allocate 9,400 to other partners based on new ownership percentage.

Assets book value 360,000

Fair value 228,000

Loss = 360,000-228,000=132,000

Whoa, lol totally did not come out properly format wise.

FAR - 93
REG - 87
BEC - 84!!!!
AUD - 99!!!!!! CPA exam complete.

[Dan T]

After MustPass posted I knew I did something wrong, thanks NYbro

AUD - 75 ☺
FAR - 65, 71, 70, 77 ☺
BEC - 80 ☺
REG - 73, 66, 79 ☺ 2/28/15

Done!

[Dan T]

After MustPass posted I knew I did something wrong, thanks NYbro

AUD - 75 ☺
FAR - 65, 71, 70, 77 ☺
BEC - 80 ☺
REG - 73, 66, 79 ☺ 2/28/15

Done!

[WinwinCPA]

Thank you NYCaccountant very much, I realized I wrote 9400 as positive by accident, so I don't get the right answer, Darn~~

[WinwinCPA]

Thank you NYCaccountant very much, I realized I wrote 9400 as positive by accident, so I don't get the right answer, Darn~~

[Author]

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