The partnership of Winn, Xie, Yang, and Zed has the following balance sheet: $ 41,000 280,000 Cash Other assets Liabilities Winn, capital (50% of profits and losses) Xie, capital (30%) Yang, capital (10%) Zed, capital (10%) $ 59,000 71,000 99,000 51,000 41,000 Zed is personally insolvent, and one of Zed's creditors is considering suing the partnership for the $4,000 that is currently owed. The creditor realizes that this litigation could result in partnership liquidation and does not wish to force such an extreme action unless Zed is reasonably sure of obtaining at least $4,000 from the liquidation. Required: a. Prepare a predistribution plan to determine the amount for which the partnership must sell the other assets to ensure that Zed receives $4,000 from the liquidation. Liquidation expenses are expected to be $26,000. b. For how much must the partnership sell the other assets to ensure that Zed receives $4,000 from the liquidation?
The partnership of Winn, Xie, Yang, and Zed has the following balance sheet: $ 41,000 280,000 Cash Other assets Liabilities Winn, capital (50% of profits and losses) Xie, capital (30%) Yang, capital (10%) Zed, capital (10%) $ 59,000 71,000 99,000 51,000 41,000 Zed is personally insolvent, and one of Zed's creditors is considering suing the partnership for the $4,000 that is currently owed. The creditor realizes that this litigation could result in partnership liquidation and does not wish to force such an extreme action unless Zed is reasonably sure of obtaining at least $4,000 from the liquidation. Required: a. Prepare a predistribution plan to determine the amount for which the partnership must sell the other assets to ensure that Zed receives $4,000 from the liquidation. Liquidation expenses are expected to be $26,000. b. For how much must the partnership sell the other assets to ensure that Zed receives $4,000 from the liquidation?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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Transcribed Image Text:The partnership of Winn, Xie, Yang, and Zed has the following balance sheet:
$41,000
280,000
Cash
Other assets
Zed is personally insolvent, and one of Zed's creditors is considering suing the partnership for the $4,000 that is currently owed. The
creditor realizes that this litigation could result in partnership liquidation and does not wish to force such an extreme action unless Zed
is reasonably sure of obtaining at least $4,000 from the liquidation.
Required:
a. Prepare a predistribution plan to determine the amount for which the partnership must sell the other assets to ensure that Zed
receives $4,000 from the liquidation. Liquidation expenses are expected to be $26,000.
b. For how much must the partnership sell the other assets to ensure that Zed receives $4,000 from the liquidation?
Complete this question by entering your answers in the tabs below.
Partner
Balances
Liabilities
Winn, capital (50% of profits and losses)
Xie, capital (30%)
Yang, capital (10%)
Zed, capital (10%)
Sale of Assets
Beginning capital
Assumed loss of Schedule 1
Step one balances
Assumed loss of Schedule 2
Step two balances
Assumed loss of Schedule 3
Step three balances
Prepare a predistribution plan to determine the amount for which the partnership must sell the other assets to ensure that
Zed receives $10,000 from the liquidation. Liquidation expenses are expected to be $30,000.
Winn
Xie
< Partner Balances
$ 59,000
71,000
99,000
51,000
41,000
Yang
Zed
Sale of Assets >
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