Turner, Roth, and Lowe are partners who share income and loss in a 1:4:5 ratio (in percents: Turner, 10%; Roth, 40%; and Lowe, 50%). The partners decide to liquidate the partnership. Immediately before liquidation, the partnership balance sheet shows total assets, $130,800; total liabilities, $82,000; Turner, Capital, $2,900; Roth, Capital, $14,200; and Lowe, Capital, $31,700. Cash received from selling the assets was sufficient to repay all but $30,000 to the creditors. Exercise 12-13 Liquidation of partnership LO P5 Required: a. Calculate the loss from selling the assets. b. Allocate the loss from part a to the partners. c. Determine how much each partner should contribute to the partnership to cover any remaining capital deficiency.

Turner, Roth, and Lowe

a. Loss from selling the assets = $78,800

b. Loss allocation to the partners:

                                                            Turner      Roth      Lowe

Loss sharing ($78,800)                      $7,880    $31,520   $39,400

c. Capital contribution to cover deficiency:

                                                            Turner      Roth      Lowe

Contribution to cover deficiency     $3,000    $12,000    $15,000

Explanation:

a) Data and Calculations:

                                                            Turner      Roth      Lowe

Income and loss sharing ratio:               1                4             5

Assets before liquidation = $130,800

Liabilities = $82,000  

Capital balances                                 $2,900   $14,200   $31,700

Cash received from sale of assets = $52,000 ($82,000 - $30,000)

Loss from sale of assets = $78,800 ($130,800 - $52,000)

Loss sharing ($78,800)                      $7,880    $31,520   $39,400

Contribution to cover deficiency       $3,000      $12,000   $15,000

answer; private store;