Distribution of Cash Upon Liquidation Pryor and Lester are partners, sharing gai
ID: 2392685 • Letter: D
Question
Distribution of Cash Upon Liquidation
Pryor and Lester are partners, sharing gains and losses equally. They decide to terminate their partnership. Prior to realization, their capital balances are $18,000 and $12,000, respectively. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $23,000.
a. What is the amount of a gain or loss on realization?
b. How should the gain or loss be divided between Pryor and Lester?
c. How should the cash be divided between Pryor and Lester? If an amount is zero, enter "0".
Gain or Loss Amount $Explanation / Answer
a.
Cash Balance............................................$23,000
Capital Balances($18,000+$12,000)...........$30,000
Loss.............................................................($7,000)
b.Because they are sharing profit and losses equally
c.
Pryor($8,000/2) $3,500 Lestor($8,000/2) $3,500