Sedgwick Company at December 31 has cash $20,000, noncash assets $100,000 liabil

Question

Sedgwick Company at December 31 has cash $20,000, noncash assets $100,000 liabilities $55,000, and the following capital balances: Floyd $45,000 and DeWitt $20,000. The firm is liquidated, and $105,00 in cash is received for the noncash assets. Floyd and DeWitt income ratios are 60% and 40%, respectively.

Prepare a schedule of cash payments.

SEDGWICK COMPANY
Schedule of Cash Payments Item Cash + Noncash Assets = Liabilities + Floyd, Capital + DeWitt, Capital Balance before liquidation $20,000 $100,000 $55,000 $45,000 $20,000 Sale of noncash assets and allocation of gain New balances Pay liabilities New balances Cash distribution to partners Final balances $ $ $ $ $ Sedgwick Company at December 31 has cash $20,000, noncash assets $100,000 liabilities $55,000, and the following capital balances: Floyd $45,000 and DeWitt $20,000. The firm is liquidated, and $105,00 in cash is received for the noncash assets. Floyd and DeWitt income ratios are 60% and 40%, respectively. Prepare a schedule of cash payments.

Explanation / Answer

SEDGWICK COMPANY Schedule of Cash Payments Item Cash + Noncash Assets = Liabilities + Floyd, Capital + DeWitt, Capital Balance before liquidation $20,000 $100,000 $55,000 $45,000 $20,000 Sale of noncash assets and allocation of gain $105,000 -$100000 3000 2000 New balances $125,000 $0 $55,000 $48,000 $22,000 Pay liabilities -$55,000 -$55000 New balances $70,000 $0 $0 $48,000 $22,000 Cash distribution to partners -$70,000 -$48000 -22000 Final balances $0 $0 $0 $0 $0

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