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
