Twelve years ago Adams Boyd and Chambers formed a

partnership #6271
Twelve years ago, Adams, Boyd, and Chambers formed a partnership manufacturing small
circuit boards. Unfortunately, foreign competition, a softening economy, and management errors
have led the partners to realize that the company's business cannot be sustained and that the
partnership must be liquidated. A condensed balance sheet is as follows:The current value of
personal assets and liabilities of the partners, excluding those related to the partnership, are as
follows:Boyd is extremely concerned that after liquidation of the partnership they would still
continue to be personally insolvent. This would be devastating to Boyd, and they have come to
you with their concerns.Prepare a response to each of Boyd's independent questions noting that
profits and losses are allocated 40%, 20%, and 20% to Adams, Boyd, and Chambers,
respectively.1. If assets with a book value of $180,000 were sold for $200,000 and the partners
agreed to maintain a minimum cash balance of $5,000, would any of the available cash be
distributed to Boyd?2. If all of the noncash assets were sold for net proceeds of $280,000 and
all cash was distributed, would any of the available cash be distributed to Boyd?3. Assume that
all of the noncash assets were sold for net proceeds of $150,000 and all cash was distributed. If
Adams contributed the necessary assets to the partnership to liquidate unsatisfied outside
creditors, how much would Boyd be liable to Adams for?4. How much would all of the noncash
assets have to be sold for so that after distributing all available cash Boyd could liquidate their
personal liabilities?View Solution:
Twelve years ago Adams Boyd and Chambers formed a partnership

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