Prior to liquidating their partnership, Bonilla and Han had capital accounts of $185,000 and $245,000, respectively

Prior to liquidating their partnership, Bonilla and Han had capital accounts of $185,000 and $245,000, respectively. The partnership assets were sold for $30,000. The partnership had no liabilities. Bonilla and Han share income and losses equally.

a. Determine the amount of Bonilla’s deficiency.
b. Determine the amount distributed to Han, assuming Bonilla is unable to satisfy the deficiency.


Answer:














a. Bonilla’s equity prior to liquidation…………… $ 185,000
Realization of asset sales……………………… $ 30,000
Book value of assets*……………………………… 430,000
Loss on liquidation…………………………………
Bonilla’s share of loss (50% × –$400,000)……
$(400,000)
(200,000)
Bonilla’s deficiency………………………………… $ (15,000)
* $185,000 + $245,000
b. $30,000. ($245,000 – $200,000 share of loss – $15,000 Bonilla’s
deficiency; also equals the amount realized from asset sales)




Prior to liquidating their partnership, Manning and Adamo had capital accounts of $240,000 and $150,000, respectively. Prior to liquidation, the partnership had no cash assets other than what was realized from the sale of assets. These partnership assets were sold for $410,000. The partnership had $80,000 of liabilities. Manning and Adamo share income and losses equally. Determine the amount received by Manning as a final distribution from liquidation of the partnership.


Answer:











Manning’s equity prior to liquidation………………………… $240,000
Realization of asset sales………………………………………… $410,000
Book value of assets
($240,000 + $150,000 + $80,000)…………………………… 470,000
Loss on liquidation……………………………………………… $ (60,000)
Manning’s share of loss (50% × $60,000)…………………… 30,000
Manning’s cash distribution…………………………………… $270,000