Determine the schedule of assumed loss absorption

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Problem - The December 31, 2020 balance sheet of the Chan, Dickerson, and Gunther partnership, along with the partners' residual profit-and-loss-sharing ratios, is summarized as follows:

Assets

Equities

Cash

60,000

Account Payable

90,000

Receivables

120,000

Loan from Dickerson

50,000

Inventory

150,000

Chan Capital (20%)

95,000

Due from Chan

15,000

Dickerson Capital (30%)

160,000

Other Assets

255,000

Gunther Capital (50%)

205,000

 

600,000

 

600,000

The partners agree to liquidate their partnership as soon as possible after January 1, 2021, and to distribute all cash as it becomes available.

Required -

1) Determine the vulnerability rank for each partner.

2) Determine the schedule of assumed loss absorption.

3) Prepare the cash distribution plan to show how cash will be distributed as it becomes available.

Reference no: EM132825717

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