Problem 15-25 (LO 15-3) The partnership of Hendrick, Mitchum, and Redding has th

Question

Problem 15-25 (LO 15-3) The partnership of Hendrick, Mitchum, and Redding has the following account balances: Cash Noncash assets $ 68,8 Liabilities $31,808 147,ee0 94,808 (53,e08) 159,800 Hendrick, capital Mitchum, capital Redding, capital This partnership is being liquidated. Hendrick and Mitchum are each entitled to 30 percent of all profits and losses with the remaining 40 percent going to Redding. a. What is the maximum amount that Redding might have to contribute to this partnership because of the deficit capital balance? b. How should the $29,000 cash that is presently available in excess of liabilities be distributed? c. If the noncash assets are sold for a total of $74.000, what is the minimum amount of cash that Hendrick could receive? (Do not round Intermedlete calculetions.) a. Maximum amount b. Distributed: Hendrick Mitchum Redding c. Minimum amount

Explanation / Answer

(a) Maximum about should be paid by the redding is the amount , the assets of the partnership are sold, liabilities are paid off, and any remaining cash is distributed to the partners according to their capital account balances.

redding contribute = 53000 + 12400(liablities) - 11600(cash) - 29600(asset).

= 24200

(b) $29000 should be disributed in profit sharing ratio.

so,

Hedrick Recive = 29000* (30/100) = 8700

Mitchium Recive = 29000* (30/100) =8700

Redding recive = 29000* (40/100) = 11600

(c) Minimum amount Hendrick recive = 147000 - 9300(liablities) + 8700(cash) + 22200(asset)

= 168600

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