Liquidation—Cash distribution computation, safe payments schedule
Fred, Ethel, and Lucy have decided to liquidate their partnership. Account balances on January 1, 2011, are as follows:
|
Cash |
$120,000 |
Accounts payable |
$ 40,000 |
|
Other assets |
120,000 |
Fred capital (30%) |
85,000 |
|
$240,000 |
Ethel capital (30%) |
25,000 |
|
|
Lucy capital (40%) |
90,000 |
||
|
$240,000 |
The partners agree to keep a $10,000 contingency fund and to distribute available cash immediately.
REQUIRED: Determine the amount of cash that should be paid to each partner.