Prepare a cash distribution plan as of June 30, 20X1, showing how much cash each partner will receive if the partners accept the offer to sell the assets.
The Pen, Evan, and Torves Partnership has asked you to assist in winding-up its business affairs. You compile the following information.
1.
The partnership’s trial balance on June 30, 20X1, is
Debit
Credit
Cash
$
7,200
Accounts Receivable (net)
38,000
Inventory
27,000
Plant and Equipment (net)
98,400
Accounts Payable
$
10,600
Pen, Capital
67,000
Evan, Capital
57,000
Torves, Capital
36,000
Total
$
170,600
$
170,600
2.
The partners share profits and losses as follows: Pen, 50 percent; Evan, 25 percent; and Torves, 25 percent.
3.
The partners are considering an offer of $112,000 for the firm’s accounts receivable, inventory, and plant and equipment as of June 30. The $112,000 will be paid to creditors and the partners in installments, the number and amounts of which are to be negotiated.
Required:
Prepare a cash distribution plan as of June 30, 20X1, showing how much cash each partner will receive if the partners accept the offer to sell the assets.
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