chapter 15 advanced tutorial

7/25/2019 Chapter 15 Advanced Tutorial

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CHAPTER 15PARTNERSHIPS: TERMINATION AND LIQUIDATION

Answers to Questions

1. A dissolution refers to the cessation of a partnership. In many cases, this process is simplya preliminary step in the transfer of business property to a newly formed partnership.Therefore, a dissolution does not necessarily affect the operations of the business. In aliquidation, however, actual business activities must cease. Partnership property is sold withthe remaining cash distributed to creditors and to any partners with positive capitalbalances. Dissolution refers to changes in the composition of a partnership whereasliquidation is the selling of a partnerships assets.

!. "any reasons can e#ist that would lead to the termination and liquidation of a partnership.The business might simply have failed to generate sufficient profits or the partners mayelect to enter other lines of wor$. %iquidation can also be required by the death, retirement,

or withdrawal of one of the partners. In such cases, liquidation is often necessary to settlethe partners interest in the business. The ban$ruptcy of an individual partner can also forcethe termination of the business as can the ban$ruptcy of the partnership itself.

&. During the liquidation process, monitoring the balance of the partners capital accountsbecomes of paramount importance. That amount will eventually indicate either the cash tobe received by the partners as final distributions or the additional contributions that they arerequired to pay. 'onsequently, all liquidation gains and losses are recorded directly aschanges to these capital balances. (uch recording enhances the informational value of theaccounts. As an additional factor, the computation of a net income figure is of diminishedimportance since normal operations have ceased.

). *inal distributions made to the various partners are based solely on their ending capital

account balances unless the partners have agreed otherwise. If any partner has a deficitbalance, an additional contribution should be made to offset the negative amount. In somesituations, a question may arise as to whether compensation for a deficit will ever beforthcoming from the responsible party. The remaining partners may choose to allocate theavailable cash immediately based on the assumption that the deficit balance eventually willprove to be a total loss.

+. A schedule of liquidation provides financial data about the liquidation process as it hasprogressed to date. Information to be presented includes the balances of all remainingassets, the liability total, and the capital account of each partner. In addition, the allocationof all gains and losses incurred in the liquidation process as well as the payment ofe#penses should be evident.

. *rom a legal viewpoint, any partner who incurs a negative -or deficit capital balance isobligated to ma$e an additional contribution to offset that amount.


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/. A safe capital balance is the amount of a partners capital account that e#ceeds all possibleneeds of a partnership as it goes through liquidation. A partner should, therefore, be able toreceive this balance immediately without endangering the future amount to be received byany other party connected with the liquidation. (afe capital balances are computed by

pro0ecting a series of assumptions whereby the partnership undergoes ma#imum lossesduring the remainder of the liquidation process. All noncash assets are assumed to have noresale value, liquidation e#penses are set at the largest possible estimation, and allpartners are viewed as personally insolvent. Any capital balance that would remain after thisseries of anticipated events can be distributed to the partners immediately without incurringany ris$.

. The marshaling of assets doctrine is a provision within the 2niform Partnership Act thatindicates the priority of claims when a partner becomes personally insolvent. 3y providing aran$ing of these claims, an orderly and fair distribution of available property can be made.The marshaling of assets provision states4

5here a partner has become ban$rupt or his estate is insolvent, the claims against hisseparate property shall ran$ in the following order4-I Those owing to separate creditors,-II Those owing to partnership creditors,-IIIThose owing to partners by way of contributions.

6. A partners personal creditors do have a limited claim against partnership assets. 7ecoveryis possible but only if payment of all partnership debts is assured and the insolvent partnerhas a positive capital balance.

18. *or distribution purposes, the 2niform Partnership Act states that loans from partners ran$ahead of the partners9 capital balances. Thus, the handling of loans in a liquidation wouldseem to be obvious4 5hen money becomes available for the partners, all loans frompartners should be repaid before any amount is given to a partner because of a safe capitalbalance.

A problem arises, though, in the above solution if a partner -especially if the partner iscurrently insolvent has made a loan to a partnership but has a potentially negative capitalbalance. The final capital balance may require a contribution to the partnership that thepartner may be unable or unwilling to ma$e. If the 2niform Partnership Act is followedprecisely, a partner could collect money on a loan while still having an obligation to thepartnership because of a negative capital balance.

To avoid this problem, in practice a partner9s loan balance is usually merged with thatpartner9s capital balance to minimi:e the chance of a negative capital balance occurring.

This particular partner may get less money from the liquidation because of this treatmentbut the other partners are better protected.


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11. A proposed schedule of liquidation is used by the accountant to determine the allocation ofany cash balances generated during the early stages of liquidation. ;ften, sufficient cashwill be collected to pay all liabilities as well as potential liquidation e#penses. Additional cashshould then be distributed to the partners to allow them immediate use of their funds. Aproposed schedule of liquidation can be produced to determine the allocation of this

available cash. The statement is based on anticipating a series of assumed losses from thecurrent day forward4 all remaining noncash assets are scrapped, ma#imum liquidatione#penses are incurred, and each partner is personally insolvent. The ending balances thatwould result from these simulated transactions represent safe capital balances. Thisamount of cash can be distributed presently and the partners will still retain enough capitalto absorb all future losses.

1!. A predistribution plan is produced based on an assumed series of losses.


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Answers to Probles

1! C

"! A

#! D

$! %

5! % Angela, Capital Woodrow, Capital Cassidy, Capital

Re&orte' b(l(n)es *1+,--- *1.,--- */1",---0Potenti(l loss ro

C(ssi'2 'ei)it/s&lit 53.:#3.) /4,5--0 /$,5--0 1",---

C(s 'istributions *11,5-- *1#,5-- 6-6

7! % Bell Hardy Dennard SuddathRe&orte' b(l(n)es *5-,--- *57,--- *1$,--- *.-,---Loss on s(le o (ssets /*11-,---0

s&lit on ( $:#:":1 b(sis /$$,---0 /##,---0 /"",---0 /11,---0A'8uste' b(l(n)es * 7,--- *"#,--- */.,---0 *7+,---Potenti(l loss ro Denn(r'

'ei)it /s&lit $:#:10 /$,---0 /#,---0 .,--- /1,---0Miniu )(s 'istributions *",--- *"-,--- * 6-6 *7.,---

4! A

.! A Art Raymond DarbyRe&orte' b(l(n)es !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! *1.,--- *"5,--- *"7,---Loss on s(le o (ssets /*"",---0 s&lit on ( $:#:# b(sis !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! /.,.--0 /7,7--0 /7,7--0A'8uste' b(l(n)es !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! * +,"-- *1.,$-- *1+,$--Anti)i&(te' li9ui'(tion e&enses /*1",---0 s&lit on ( $:#:# b(sis !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! /$,.--0 /#,7--0 /#,7--0Anti)i&(te' (iu loss on in;entor2/*#1,---0 s&lit on ( $:#:# b(sis !!!!!!!!!!!!!!! /1",$--0 /+,#--0 /+,#--0

Potenti(l b(l(n)es !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! */.,---0 * 5,5-- * 7,5--Potenti(l loss ro Art 'ei)it /s&lit #:#0 ! .,--- /$,---0 /$,---0

Current )(s 'istribution !!!!!!!!!!!!!!!!!!!!!!!!!! * 6-6 * 1,5-- * ",5--


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+! D Sin)e te &(rtnersi& )urrentl2 (s tot(l )(&it(l o *$--,---, te *#-,---t(t is (;(il(ble woul' in'i)(te (iu &otenti(l losses o *#4-,---!

A % CRe&orte' b(l(n)es *1--,--- *1"-,--- *1.-,---Anti)i&(te' loss /*#4-,---0 s&lit on

( ":#:5 b(sis /4$,---0 /111,---0 /1.5,---0Potenti(l b(l(n)es * "7,--- * +,--- * /5,---0Potenti(l loss ro C 14-,---

Te (ssu&tion is ('e t(t ( *1#-,--- loss o))urs!"e#in Mi$hael Brendan %onathan

Re&orte' b(l(n)es !!!!!!!!!!!!!!!!!!!!!!!!!!*5+,--- *#+,--- *#$,--- *#$,---Assue' loss /*1#-,---0 s&lit on

( $:#:1:" b(sis !!!!!!!!!!!!!!!!!!!!!!!!!!!!!/5",---0 /#+,---0 /1#,---0 /"7,---0A'8uste' b(l(n)es !!!!!!!!!!!!!!!!!!!!!!!!!!!!* 4,--- * 6-6 *"1,--- * .,---

Maximum osses !hat Can &ow Be Absorbed=e;in *4,---3$34 *1","5- /ost ;ulner(ble to losses0%ren'(n *"1,---3134 1$4,---?on(t(n *.,---3"34 ".,---

"e#in Brendan %onathanRe&orte' b(l(n)es !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!*4,--- *"1,--- *.,---Assue' loss /*1","5-0 s&lit on (

$:1:" b(sis !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! /4,---0 /1,45-0 /#,5--0A'8uste' b(l(n)es * 6-6 *1+,"5- *$,5--

Maximum osses !hat Can &ow Be Absorbed

%ren'(n *1+,"5-313# *54,45-?on(t(n *$,5--3"3# 7,45- /ost ;ulner(ble to losses0

Te (ssu&tion is ('e t(t ( *7,45- loss o))urs!

Brendan %onathanRe&orte' b(l(n)es!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! *1+,"5- *$,5--Assue' loss /*7,45-0 s&lit on ( 1:" b(sis ! !! ! /","5-0 /$,5--0A'8uste' b(l(n)es !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! *14,--- * 6-6

11! C To wor@ tis &roble, ( &re'istribution s)e'ule is ne)ess(r2! T(ts)e'ule, wi) is )o&ute' below, is (s ollows:

irst *#,--- Boes to Menton


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Net *15,--- Boes to Menton /"3#0 (n' Hoen /13#0 Net *$",--- Boes to C(rne2 /$340, Menton /"340, (n' Hoen /1340 All re(ininB )(s Boes to C(rne2 /$31-0, Pier)e /#31-0, Menton /"31-0,

(n' Hoen /131-0

Carney 'ier$e Menton Hoehn

%eBinninB b(l(n)es *7-,--- *"4,--- *$#,--- *"-,---Assue' loss o *+-,--- /see

S)e'ule 10/$:#:":10 /#7,---0 /"4,---0 /1.,---0 /+,---0Ste& one b(l(n)es *"$,--- * 6-6 *"5,--- *11,---Assue' loss o *$",--- /see

S)e'ule "0 /(llo)(te' on( $:-:":1 b(sis0 /"$,---0 * 6 - 6 /1",---0 /7,---0

Ste& two b(l(n)es * 6-6 * 6-6 *1#,--- * 5,---Assue' loss o *15,--- /see

S)e'ule #0 /(llo)(te' on (-:-:":1 b(sis0 6 - 6 6 - 6 /1-,---0 /5,---0

Ste& tree b(l(n)es * 6 - 6 * 6 - 6 * #,--- * 6 - 6

S)e'ule 1Maximum oss

Capital Balan$e( !hat Can'artner oss Allo$ation Be AbsorbedC(rne2 *7-,---3$-> *15-,---Pier)e *"4,---3#-> * +-,--- /ost ;ulner(ble0Menton *$#,---3"-> *"15,---Hoen *"-,---31-> *"--,---

S)e'ule "Maximum oss

Capital Balan$e( !hat Can'artner oss Allo$ation Be AbsorbedC(rne2 *"$,---3/$340 * $",--- /ost ;ulner(ble0Menton *"5,---3/"340 * .4,5--Hoen *11,---3/1340 * 44,---

S)e'ule #Maximum oss

Capital Balan$e( !hat Can'artner oss Allo$ation Be AbsorbedMenton *1#,---3/"3#0 * 1+,5--Hoen * 5,---3/13#0 * 15,--- /ost ;ulner(ble0

1"!C Te *17,--- (;(il(ble )(s )(n be 'istribute' but soul' be 'one un'er te(ssu&tion t(t (ll 'ei)it b(l(n)es will be tot(l losses! Ater osettinB?ones< lo(n, te two 'ei)its tot(l *$,---! uller (n' RoBers, te two&(rtners wit &ositi;e )(&it(l b(l(n)es, s(re &roits in ( #-:"- rel(tionsi&/te e9ui;(lent o ( 7->:$-> r(tio0! uller woul' (bsorb *",$-- o te&otenti(l loss wit RoBers beinB (llo)(te' *1,7--! Te re(ininB )(&it(l


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b(l(n)es /*1-,7-- (n' *5,$--0 (re s(e )(&it(l b(l(n)es (n' tose (ounts)(n be ie'i(tel2 'istribute'!

1#!/. Minutes0 /P(2ent o s(e )(&it(l b(l(n)es0

*7,.-- to Cle;el(n' (n' *1,"-- to Pier)e

Sin)e te &(rtnersi& )urrentl2 (s tot(l )(&it(l o *#5-,---, te *.,--- t(t is(;(il(ble woul' in'i)(te (iu &otenti(l losses o *#$",---!

&ixon Cle#eland 'ier$e

Re&orte' b(l(n)es !!!!!!!!!!!!!!!!!!!!!!!!!!!!!! *14-,--- *11-,--- *4-,---Anti)i&(te' loss /*#$",---0 s&lit

on ( 5:#:" b(sis !!!!!!!!!!!!!!!!!!!!!!!!!!!!!! /141,---0 /1-",7--0 /7.,$--0Potenti(l b(l(n)es !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! * /1,---0 * 4,$-- * 1,7--Potenti(l loss ro Nion


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1$! /"- Minutes0 /in(l settleent o ( &(rtnersi& beinB li9ui'(te'0

P(rt (! %rown Bets *"1,---, is Bets *1",---, (n' Stone Bets *",---!

Brown ish StoneRe&orte' b(l(n)es !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! *"5,--- *15,--- *5,---

Loss on s(le o l(n' /*1-,---0 s&liton ( $:#:# b(sis!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! /$,---0 /#,---0 /#,---0

C(s 'istribution !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! *"1,--- *1",--- *",---

P(rt b! %rown Bets *17,$"+ (n' is Bets *.,541

Brown ish StoneRe&orte' b(l(n)es !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! *"5,--- *15,--- *5,---Loss on s(le o l(n' /*"-,---0 s&lit on

( $:#:# b(sis!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! /.,---0 /7,---0 /7,---0A'8uste' b(l(n)es !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! *14,--- * +,--- */1,---0Potenti(l loss ro Stone


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17! /. Minutes0 /Deterine s(e )(&it(l b(l(n)es0

%(ll Bets *1$#, E(ton Bets *1,$"+, (n' L(@e Bets *#,$".!

A$e Ball +aton a*eRe&orte' b(l(n)es !!!!!!!!!!!!!!!!!!!!!!! *"5,--- *".,--- *"-,--- *"",---

M(iu losses on l(n' (n' buil'inB /*.5,---0 s&lit on ( #:#:":" b(sis /"5,5--0 /"5,5--0 /14,---0 /14,---0Esti(te' li9ui'(tion e&enses /*5,---0 s&lit #:#:":"!!!!!!!!!!!!!!!!!!!! /1,5--0 /1,5--0 /1,---0 /1,---0Potenti(l b(l(n)es !!!!!!!!!!!!!!!!!!!!!!!! */",---0 * 1,--- * ",--- * $,---Potenti(l loss ro A)e /*",---0 s&lit on ( #:":" b(sis !!!!!!!!!!!!!!!!!!!!!!!!!! ",--- /.540 /5410 /54"0C(s 'istributions !!!!!!!!!!!!!!!!!!!!!!!! * - * 1$# * 1,$"+ * #,$".

14!/15 Minutes0 /Pre&(re ( &ro&ose' s)e'ule o li9ui'(tion0

HARDIC=, SAUNDERS, AND ERRIS

Pro&ose' S)e'ule o Li9ui'(tion

Hardwi$*, erris,ther A$$ounts oan and Saunders, oan -

Cash Assets 'ayable Capital Capital Capital%eBinninB

b(l(n)es +-,--- ."-,--- "1-,--- "4-,--- "--,--- "#-,---Sol' (ssets "--,--- /#".,---0 /51,"--0 /#.,$--0 /#.,$--0Assue': loss

on re(ininB(ssets /$+",---0 /1+7,.--0 /1$4,7--0 /1$4,7--0

P(i' li(bilities /"1-,---0 /"1-,--- 0S(e b(l(n)es .-,--- - - "",--- 1$,--- $$,---

O te (;(il(ble *.-,---, *"",--- will Bo to H(r'wi)@, *1$,--- to S(un'ers, (n'*$$,--- to erris!


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1.!/4 Minutes0 /Aount o )(s nee'e' to (ssure &(2ents to (ll &(rtners0

(tson is te &(rtner ost ;ulner(ble to ( loss! A loss o onl2 *5-,--- woul')o&letel2 eliin(te (tson * .#,### loss to eliin(te )(&it(l

T2son *5-,---3"-> *"5-,--- loss to eliin(te )(&it(l(tson *1-,---3"-> * 5-,--- loss to eliin(te )(&it(l

Tus, i te loss on 'is&os(l is less t(n *5-,---, (ll &(rtners will ret(in&ositi;e )(&it(l b(l(n)es (n' re)ei;e soe )(s in li9ui'(tion! %e)(use otis, sin)e oter (ssets (re *1$-,---, te2 ust be sol' or (n2 (ount o;er*+-,--- or (ll &(rtners to Bet )(s!

1+!/5 Minutes0 /Deterine s(e )(&it(l b(l(n)es0

M(iu &otenti(l losses (re *1".,---, *.,--- in li9ui'(tion e&enses (n' ()o&lete *1"-,--- loss on te non)(s (ssets! Su) ( loss woul' re'u)e te)(&it(l b(l(n)es to: %(bb *.,.--, it(@er /*5,7--0, (n' E'w(r's /*1,"--0!

%(bb ust ret(in sui)ient )(&it(l /*7,.--0 to be (ble to (bsorb te &ossiblelosses o it(@er (n' E'w(r's! Te re(ininB *",--- is ( s(e )(&it(lb(l(n)e or %(bb!

"-!/1- Minutes0 /Deterine (ount to be )ontribute' b2 &(rtner wit ( 'ei)itb(l(n)e0

ite (n' %lue (re bot insol;ent (n' (;e neB(ti;e )(&it(l b(l(n)es /(terosettinB te lo(n ro ite0 tot(linB *15,---! Absor&tion b2 te oter&(rtners o tese losses woul' be (s ollows /on ( #-:1-:"- b(sis0:

'artner Share o. oss &ew Capital Balan$e

%l()@ #-37- *15,--- *4,5-- * /$,5--0Freen 1-37- *15,--- *",5-- * /5,5--0%rown "-37- *15,--- *5,--- *1-,---

%l()@, wo is (lso insol;ent, now (s ( 'ei)it )(&it(l o *$,5-- t(t woul'(;e to be (bsorbe' b2 %rown (n' Freen /on ( 1-:"- b(sis0:

'artner Share o. oss &ew Capital Balan$eFreen 1-3#- *$,5-- *1,5-- * /4,---0%rown "-3#- *$,5-- *#,--- * 4,---

Tus, Freen ust )ontribute *4,--- t(t will Bo to %rown!


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"1!/5- Minutes0 /Co&ute ee)ts o ( li9ui'(tion un'er ( ;(riet2 o)ir)ust(n)es0

(! Dobbs re)ei;es te entire *1-,---!

M(iu &otenti(l losses o *"5-,--- on non)(s (ssets woul' be (llo)(te'(s ollows:

'artner Share o. oss &ew Capital Balan$eA'(s "31- *"5-,--- *5-,--- * #-,---%(@er #31- *"5-,--- *45,--- */$5,---0C(r;il #31- *"5-,--- *45,--- */15,---0Dobbs "31- *"5-,--- *5-,--- * $-,---

M(iu tot(l &otenti(l losses o *7-,--- to be (bsorbe' ro %(@er (n'C(r;il (bo;e woul' ten be (llo)(te' (s ollows on ( ":" b(sis:

A'(s "3$ *7-,--- *#-,--- 6-6Dobbs "3$ *7-,--- *#-,--- * 1-,---

AbsorbinB te in(l loss woul' le(;e Dobbs wit ( s(e )(&it(l b(l(n)e o*1-,---!

b! A'(s re)ei;es te entire *1-,---!

M(iu &otenti(l losses o *"5-,--- on non)(s (ssets woul' be (llo)(te'(s ollows:


A'(s "31- *"5-,--- *5-,--- * #-,---%(@er "31- *"5-,--- *5-,--- */"-,---0C(r;il #31- *"5-,--- *45,--- */15,---0Dobbs #31- *"5-,--- *45,--- * 15,---

M(iu tot(l &otenti(l losses o *#5,--- to be (bsorbe' ro %(@er (n'

C(r;il (bo;e woul' be (llo)(te' (s ollows on ( ":# b(sis:A'(s "35 *#5,--- *1$,--- * 17,---Dobbs #35 *#5,--- *"1,--- * /7,---0

AbsorbinB te in(l *7,--- loss ro Dobbs woul' le(;e A'(s wit ( s(e)(&it(l b(l(n)e o *1-,---!

)! A'(s re)ei;es *54,5-- (n' Dobbs Bets *"",5--!

Te *5-,--- loss on s(le o te buil'inB woul' be (llo)(te' (s ollows:


A'(s 1-> *5-,--- *5,--- * 45,---

%(@er #-> *5-,--- *15,--- * 15,---C(r;il #-> *5-,--- *15,--- * $5,---Dobbs #-> *5-,--- *15,--- * 45,---


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"1!)! /$ontinued)

M(iu &otenti(l loss o *1#-,--- on te l(n' woul' be (llo)(te' (s ollows:


A'(s 1-> *1#-,--- *1#,--- * 7",---%(@er #-> *1#-,--- *#+,--- */"$,---0C(r;il #-> *1#-,--- *#+,--- * 7,---Dobbs #-> *1#-,--- *#+,--- * #7,---

M(iu &otenti(l loss o *"$,--- to be (bsorbe' ro %(@er woul' be(llo)(te' (s ollows on ( 1:#:# b(sis:

A'(s 134 *"$,--- *#,$". * 5.,54"C(r;il #34 *"$,--- *1-,".7 * /$,".70Dobbs #34 *"$,--- *1-,".7 * "5,41$

M(iu &otenti(l loss o *$,".7 to be (bsorbe' ro C(r;il woul' be(llo)(te' (s ollows on ( 1:# b(sis:

A'(s 13$ *$,".7 *1,-4" *54,5--Dobbs #3$ *$,".7 *#,"1$ *"",5--

Tese (ounts re&resent s(e )(&it(l b(l(n)es or 'istribution &ur&oses!

'! Te l(n' (n' buil'inB ust be sol' or o;er *115,--- to ensure t(t C(r;il willre)ei;e soe )(s!

Adams Ba*er Car#il Dobbs%eBinninB b(l(n)es * .-,--- * #-,--- * 7-,--- * +-,---

Assue' loss o *1--,--- /seeS)e'ule 10 /1:#:$:"0 /1-,---0 /#-,---0 /$-,---0 /"-,---0

Ste& One b(l(n)es * 4-,--- * 6-6 * "-,--- * 4-,---Assue' loss o *#5,--- /see

S)e'ule "0 /(llo)(te' on (1:-:$:" b(sis0 /5,---0 6 - 6 /"-,---0 /1-,---0

Ste& Two b(l(n)es * 75,--- * 6-6 * 6-6 * 7-,---Assue' loss o *+-,--- /see

S)e'ule #0 /(llo)(te' on (1:-:-:" b(sis0 /#-,---0 6 - 6 6 - 6 /7-,---0

Ste& Tree b(l(n)es * #5,--- * 6 - 6 * 6 - 6 * 6 - 6


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"1!'! /$ontinued)

PREDISTRI%UTION PLAN

Te irst *#5,--- (;(il(ble Boes to A'(s! Net *+-,--- is s&lit betweenA'(s (n' Dobbs on ( 1:" b(sis! Net *#5,--- is s&lit between A'(s, C(r;il,

(n' Dobbs on ( 1:$:" b(sis! All re(ininB )(s is s&lit between A'(s, %(@er,C(r;il, (n' Dobbs on te oriBin(l &roit (n' loss r(tio!

Tot(l )(s o *1"5,--- /*#5,--- G *+-,---0 (s to be (;(il(ble beore C(r;il willre)ei;e (n2 )(s! Sin)e te &(rtnersi& (lre('2 (s *1-,--- )(s in e)ess oits li(bilities, te l(n' (n' buil'inB ust be sol' or o;er *115,--- to ensureC(r;il o re)ei;inB soe (ount!

As (noter (&&ro() to te &roble, C(r;il *$5-,---


Capital Balan$e( !hat Can'artner oss Allo$ation Be Absorbed

A'(s *4-,---3/1340 *$+-,---C(r;il *"-,---3/$340 * #5,--- /ost ;ulner(ble0Dobbs *4-,---3/"340 *"$5,---

S)e'ule #Maximum oss

Capital Balan$e( !hat Can'artner oss Allo$ation Be Absorbed

A'(s *75,---3/13#0 *1+5,---Dobbs *7-,---3/"3#0 * +-,--- /ost ;ulner(ble0


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""! /#- Minutes0 /Pre&(re ( &re'istributlon &l(n0

An (ssue' series o losses is siul(te' wi) eliin(tes e() &(rtner * 45,--- /ost ;ulner(ble0Norris *7-,---3#-> *"--,---S&en)er *45,---3"-> *#45,---H(rrison *$1,"5-3#-> *1#4,5--


Capital Balan$e( !hat Can'artner oss Allo$ation Be AbsorbedNorris *#4,5--3/#3.0 *1--,---S&en)er *7-,---3/"3.0 *"$-,---H(rrison *1.,45-3/#3.0 * 5-,--- /ost ;ulner(ble0

S)e'ule # Maximum ossCapital Balan$e( !hat Can

'artner oss Allo$ation Be AbsorbedNorris *1.,45-3/#350 * #1,"5- /ost ;ulner(ble0S&en)er *$4,5--3/"350 *11.,45-


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"#! /"- Minutes0 /Pre&(re (n' use ( &re'istribution &l(n0

P(rt (!

Maximum osses !hat Can Be Absorbed

Able *5-,---3!" *"5-,---Moon *7-,---3!# "--,---

er@l *5-,---3!5 1--,--- /ost ;ulner(ble to losses0

Able0!

"$! /"5 Minutes0 /Pro'u)e ( &re'istribution &l(n or ( &(rtnersi& li9ui'(tion0


16/32

Maximum osses !hat Can Be Absorbed

Si&son *1.,---3"-> * +-,--- /ost ;ulner(ble to losses0H(rt *$-,---3$-> 1--,---%obb *$.,---3"-> "$-,---

Rei'l *1#5,---3"-> 745,---

Te (ssu&tion is ('e t(t ( *+-,--- loss o))urs!

Simpson Hart Bobb Reidl Re&orte' b(l(n)es *1.,--- *$-,--- *$.,--- *1#5,---Assue' loss /*+-,---0 s&lit on ( ":$:":" b(sis /1.,---0 /#7,---0 /1.,---0 /1.,---0A'8uste' b(l(n)es * - * $,--- *#-,--- *114,---


H(rt *$,---3$3. * .,--- /ost ;ulner(ble to losses0%obb *#-,---3"3. 1"-,---Rei'l *114,---3"3. $7.,---

Te (ssu&tion is ('e t(t (n *.,--- loss o))urs!Hart Bobb Reidl

Re&orte' b(l(n)es *$,--- *#-,--- *114,---Assue' loss /*.,---0 s&lit on ( $:":" b(sis /$,---0 /",---0 /",---0A'8uste' b(l(n)es * - *".,--- *115,---


%obb *".,---3"3$ 57,--- /ost ;ulner(ble to losses0Rei'l *115,---3"3$ "#-,---

Te (ssu&tion is ('e t(t ( *57,--- loss o))urs!

Bobb Reidl Re&orte' b(l(n)es *".,--- *115,---Assue' loss /*57,---0 s&lit on ( ":" b(sis /".,---0 /".,---0A'8uste' b(l(n)es * - * .4,---


Te irst *5+,--- Boes to &(2 li(bilities (n' e&e)te' li9ui'(tion e&enses! Te net *.4,--- Boes entirel2 to Rei'l! Te net *57,--- is s&lit e;enl2 between %obb (n' Rei'l! Te net *.,--- is s&lit (onB H(rt /$3.0, %obb /"3.0, (n' Rei'l /"3.0! All re(ininB )(s is s&lit (onB te &(rtners ())or'inB to teir oriBin(l

&roit (n' loss r(tio!

"5!/#- Minutes0 /Deterine te r(ii)(tions o ( ;(riet2 o li9ui'(tion situ(tions0


17/32

P(rt A!/(0 *$.,---! M(iu losses o *1--,--- on te non)(s (ssets woul'

in)re(se Milburn


18/32

"5! /$ontinued)

/)0 S(&son soul' re)ei;e *5--! I =linBon is insol;ent, te *14,--- 'ei)itb(l(n)e will (;e to be (bsorbe' b2 te re(ininB tree &(rtners on ( $:#:1b(sis! Tis loss woul' 'e)re(se S(&son


19/32

"7! /$ontinued)

As te (bo;e (ounts re&resent s(e )(&it(l b(l(n)es, &(2ents )(n be&resentl2 ('e to tese two &(rtners!

A&ril, C(&it(l !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 17,.45M(2, C(&it(l !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! "7,7"5

C(s !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! $#,5--

! C(s /#->0 !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 11,4--M(r), C(&it(l /"37 o loss0 !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! +,1--A&ril, C(&it(l /#370!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 1#,75-M(2, C(&it(l /1370!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! $,55-

A))ounts Re)ei;(ble !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! #+,---

B! C(s !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 14,---M(r), C(&it(l /"37 o loss0 !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 4,---A&ril, C(&it(l /#370 !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 1-,5--

M(2, C(&it(l /1370 !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! #,5--L(n', %uil'inB (n' E9ui&ent !!!!!!!!!!!!!!!!!!!!!!!!!!!! #.,---

! Li(bilities !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! "1,---C(s !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! "1,---

i! Sin)e *".,4-- )(s re(ins (n' e() &(rtner (s ( &ositi;e )(&it(lb(l(n)e, te one2 let )(n be 'istribute' b(se' on tese en'inB tot(ls!

M(r), C(&it(l !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! $--A&ril, C(&it(l !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! "1,""5

M(2, C(&it(l !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 4,-45C(s !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ".,4--


20/32

"4!/#- Minutes0 /Deterine li9ui'(tion &ro)ee's ne)ess(r2 to Bi;e &(rtner (s&e)iie' (ount0

Te oter (ssets ust be sol' or (t le(st *5-,---!

or tis )re'itor to Bet *5,--- ro


21/32

"44 /$ontinued)

S)e'ule 1Capital Balan$e( Maximum oss to

'artner oss Allo$ation Be Absorbed *7-,---35-> *1"-,--- /ost ;ulner(ble0 *4.,---3#-> *"7-,---

*$-,---31-> *$--,--- *#-,---31-> *#--,---

S)e'ule "Capital Balan$e( Maximum oss to

'artner oss Allo$ation Be Absorbed *$",---3/#350 * 4-,--- /ost ;ulner(ble0

*".,---3/1350 *1$-,--- *1.,---3/1350 * +-,---

S)e'ule #Capital Balan$e( Maximum oss to

'artner oss Allo$ation Be Absorbed *1$,---3/13"0 * ".,--- * $,---3/13"0 * .,--- /ost ;ulner(ble0


22/32

".! /#5 Minutes0 /Deterine ontl2 s(e )(&it(l &(2ents0

AN, %A=EL, AND CO PARTNERSHIPS(e Inst(llent P(2ents to P(rtners

?(nu(r2 #1, "--+

!otal 5an Ba*el Cox Proit (n' loss r(tio 1--> 5-> #-> "->

Preli9ui'(tion )(&it(l b(l(n)es *".",--- *11.,--- * +-,--- *4$,---A'' /'e'u)t0 lo(ns /1-,---0 /#-,---0 "-,--- 6-6

"4",--- ..,--- 11-,--- 4$,---?(nu(r2 losses /S)e'ule 10 /".,---0 /1$,---0 /.,$-- 0 /5,7--0E9uit2 o &(rtnersi&

?(nu(r2 #1, "--+ "$$,--- 4$,--- 1-1,7-- 7.,$--Potenti(l losses /S)e'ule 10 /1++,---0 /++,5--0 /5+,4--0 /#+,.--0

$5,--- /"5,5--0 $1,+-- ".,7--

Potenti(l loss(n


23/32

".! /$ontinued)

AN, %A=EL, AND CO PARTNERSHIPS(e Inst(llent P(2ents to P(rtners

ebru(r2 "., "--+

!otal 5an Ba*el Cox E9uit2 o &(rtnersi&

?(nu(r2 #1, "--+ /(bo;e0 !! *"$$,--- *4$,--- *1-1,7-- *7.,$--S(e &(2ents /(bo;e0 !!!!!!!!!!! /$5,---0 6-6 /"7,7--0 /1.,$--0ebru(r2 li9ui'(tion e&enses /#,---0 /1,5--0 /+--0 /7--0E9uit2 o &(rtnersi&

ebru(r2 "., "--+ !!!!!!!!!!!!!! 1+7,--- 4",5-- 4$,1-- $+,$--Potenti(l li(bilities (n' e&enses /7,---0 /#,---0 /1,.--0 /1,"--0Potenti(l loss on ()iner2 (n'

e9ui&ent !!!!!!!!!!!!!!!!!!!!!!!!!! /1.+,---0 /+$,5--0 /57,4--0 /#4,.--01,--- /"5,---0 15,7-- 1-,$--

Potenti(l loss(n


24/32

"+!/#5 Minutes0 /Deterine )(s 'istributions or our 'ierent &(rtnersi&li9ui'(tions0

Haynes,P(rt A Simon, oan and %a$*son,

Capital Capital Capital %eBinninB b(l(n)es *17,--- * $,--- /*1",---0Contribution b2 ?()@son 6 - 6 6 - 6 #,---C(&it(l b(l(n)es *17,--- * $,--- /* +,---0Eliin(tion o ?()@son


25/32

"+! /$ontinued)

P(rt DRedmond,oan and edbetter, Watson, Sandridge,

Capital Capital Capital Capital

%eBinninB b(l(n)es /*17,---0 /*#-,---0 * #,--- *15,---Allo)(tion o Re'on'


26/32

#-! /$- Minutes0 /Pro'u)e ( s)e'ule o li9ui'(tion0

RIC=, ILSON, AND CLAR=ES)e'ule o P(rtnersi& Li9ui'(tion

in(l %(l(n)es

Cash&on$ashAssets iabilities

ri$*,Capital/678)

Wilson,Capital/978)

Clar*e,Capital/978)

%eBinninB b(l(n)es *$.,--- *144,--- *#5,--- *1-1,--- *".,--- *71,---Distribution o *$,--- /)(s in e)ess o li(bilities (n' esti(te' li9ui'(tion e&enses0 in ())or'(n)e wit &re'istribution &l(n S)e'ule 1

/$,---0 /$,---0U&'(te' b(l(n)es *$$,--- *144,--- *#5,--- *1-1,--- *".,--- *54,---Non)(s (ssets sol' $.,--- /.-,---0 /1+,"-- 0 /7,$-- 0 /7,$--0U&'(te' b(l(n)es *+",--- *+4,--- *#5,--- *.1,.-- *"1,7-- *5-,7--All li(bilities (re &(i' /#5,---0 /#5,---0U&'(te' b(l(n)es *54,--- *+4,--- *6-6 *.1,.-- *"1,7-- *5-,7--Distribution o *$.,--- /)(s in e)ess o li(bilities (n' esti(te' li9ui'(tion e&enses0 in ())or'(n)e wit &re'istribution &l(n S)e'ule 1:

irst *"#,### /re(in'er o irst'istribution0 /"#,###0 /"#,###0

Net *"",774 /"",7740 /14,---0 /5,7740Net *",--- /",---0 /1,"-- 0 /$-- 0 /$--0

U&'(te' b(l(n)es *+,--- *+4,--- *6-6 *7#,7-- *"1,"-- *"1,"--Non)(s (ssets sol' $$,--- /+4,---0 /#1,.-- 0 /1-,7-- 0 /1-,7--0

U&'(te' b(l(n)es *5#,--- *6-6 *6-6 *#1,.-- *1-,7-- *1-,7--P(i' li9ui'(tion e&enses /4,---0 /$,"-- 0 /1,$-- 0 /1,$--0

U&'(te' b(l(n)es *$7,--- *6-6 *6-6 *"4,7-- *+,"-- *+,"--in(l 'istribution b(se' on en'inB

)(&it(l ())ount b(l(n)es /$7,---0 /"4,7-- 0 /+,"-- 0 /+,"--0En'inB b(l(n)e *6-6 *6-6 *6-6 *6-6 *6-6 *6-6


27/32

#-4 /$ontinued)

S)e'ule 1De;elo&ent o Pre'istribution S)e'ule

ri$*, Wilson, Clar*e,Capital Capital Capital

%eBinninB b(l(n)es !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! *1-1,--- *".,--- *71,---Loss o *1$-,--- (ssue'S)e'ule "

/(llo)(te' on ( 7-:"-:"- b(sis0 !!!!!!!!!!! /.$,---0 /".,---0 /".,---0Ste& One b(l(n)es !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! * 14,--- * 6-6 *##,---Loss o *"",774 (ssue'S)e'ule #

/(llo)(te' on ( 7-:"- b(sis0 !!!!!!!!!!!!!!!! /14,---0 6 - 6 /5,7740Ste& Two b(l(n)es !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! * 6 - 6 * 6 - 6 *"4,###


P(2ent o li(bilities (n' li9ui'(tion e&enses ust be (ssure'! Net*"4,### Boes to Cl(r@e!

Net *"",774 is s&lit between ri)@ (n' Cl(r@e on ( 7-:"- b(sis! An2 urter )(s is s&lit (onB ri)@, ilson, (n' Cl(r@e on ( 7-:"-:"-

b(sis!

S)e'ule "

Maximum ossCapital Balan$e( !hat Can

'artner oss Allo$ation Be Absorbed

ri)@ *1-1,---37-> *17.,###ilson * ".,---3"-> *1$-,--- /ost ;ulner(ble to loss0Cl(r@e * 71,---3"-> *#-5,---

S)e'ule #

Maximum ossCapital Balan$e( !hat Can

'artner oss Allo$ation Be Absorbedri)@ *14,---3/7-3.-0 * "",774 /ost ;ulner(ble to loss0Cl(r@e *##,---3/"-3.-0 *1#",---


28/32

#1!/5- Minutes0 /Pro'u)e ( &re'istribution &l(n (n' 8ourn(l entries or (&(rtnersi& li9ui'(tion0

Rodgers,P(rt A Wingler, &orris, oan and :uthrie,

Capital Capital Capital Capital %eBinninB b(l(n)es !!!!!!!!!!!!!!! *1"-,--- *..,--- *1-+,--- *7-,---Loss o *15-,--- (ssue' /(l6

lo)(te' on ( #-:1-:"-:$-b(sis0 see S)e'ule 1 !!!!!!!!! /$5,---0 /15,---0 /#-,---0 /7-,---0

Ste& One b(l(n)es !!!!!!!!!!!!!!!!!! * 45,--- *4#,--- * 4+,--- * 6-6Loss o *15-,--- (ssue' /(l6

lo)(te' on ( #-:1-:"- b(sis0see S)e'ule " !!!!!!!!!!!!!!!!!!!!! /45,---0 /"5,---0 /5-,---0 6-6

Ste& Two b(l(n)es !!!!!!!!!!!!!!!!!! * 6-6 *$.,--- * "+,--- * 6-6Loss o *$#,5-- (ssue'

/(llo)(te' on ( 1-:"- b(sis0 seeS)e'ule # !!!!!!!!!!!!!!!!!!!!!!!!!!! 6-6 /1$,5--0 /"+,---0 6-6

Ste& Tree b(l(n)es !!!!!!!!!!!!!!! * 6-6 *##,5-- * 6-6 * 6-6


P(2ent o (ll li(bilities (n' li9ui'(tion e&enses ust be (ssure'! Net *##,5-- Boes entirel2 to Norris! Net *$#,5-- is (llo)(te' to Norris /1-3#-0 (n' Ro'Bers /"-3#-0! Net *15-,--- is (llo)(te' to inBler /#-37-0, Norris /1-37-0, (n' Ro'Bers

/"-37-0! An2 urter )(s 'istributions (re 'i;i'e' on te oriBin(l &roit (n' loss

r(tio:

inBler /#->0, Norris /1->0, Ro'Bers /"->0, (n' Futrie /$->0!

S)e'ule 1

Maximum ossCapital Balan$e( !hat Can Be

'artner oss Allo$ation Absorbed

inBler *1"-,---3#-> *$--,---Norris * ..,---31-> *..-,---Ro'Bers *1-+,---3"-> *5$5,---Futrie * 7-,---3$-> *15-,--- /ost ;ulner(ble to loss0


29/32

#1! (! /$ontinued)S)e'ule "


'artner oss Allo$ation AbsorbedinBler *45,---3/#-37-0 *15-,--- /ost ;ulner(ble to loss0Norris *4#,---3/1-37-0 *$#.,---Ro'Bers *4+,---3/"-37-0 *"#4,---

S)e'ule #


'artner oss Allo$ation AbsorbedNorris *$.,---3/1-3#-0 *1$$,---Ro'Bers *"+,---3/"-3#-0 * $#,5-- /ost ;ulner(ble to loss0


30/32

#1! /$ontinued)

P(rt %

C(s !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 75,7--inBler, C(&it(l /#-> o *17,$-- loss0 !!!!!!!!!!!!!!! $,+"-Norris, C(&it(l /1->0 !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 1,7$-Ro'Bers, C(&it(l /"->0 !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! #,".-Futrie, C(&it(l /$->0 !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 7,57-

A))ounts Re)ei;(ble !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! .",---Re)ei;(bles (re )olle)te' wit losses (llo)(te'to &(rtners!

C(s !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 15-,---inBler, C(&it(l /#-> o *1-#,--- loss0 !!!!!!!!!!!!! #-,+--Norris, C(&it(l /1->0 !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 1-,#--Ro'Bers, C(&it(l /"->0 !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! "-,7--

Futrie, C(&it(l /$->0 !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! $1,"--L(n' !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! .5,---%uil'inB (n' E9ui&ent !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 17.,---

L(n', buil'inB (n' e9ui&ent (re sol' witlosses (llo)(te' to &(rtners!

inBler, C(&it(l !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! #1,.--Norris, C(&it(l !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 5.,7--Ro'Bers, Lo(n !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! #5,---Ro'Bers, C(&it(l !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 15,"--

C(s !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 1$-,7--

Abo;e entr2 'istributes s(e )(&it(l b(l(n)es (ssown below /see &re'istribution &l(n in &(rt A0b(se' on ( )urrent )(s b(l(n)e o *"#-,7--!

irst *+-,--- is el' to &(2 li(bilities /*4$,---0 (n' esti(te' li9ui'(tione&enses /*17,---0!

Net *##,5-- Boes entirel2 to Norris! Net *$#,5-- is s&lit between Norris /*1$,5--0 (n' Ro'Bers /*"+,---0! Re(ininB *7#,7-- is (llo)(te' to inBler /*#1,.--0, Norris /*1-,7--0

(n' Ro'Bers /*"1,"--0!

No 8ourn(l entr2 is )urrentl2 re9uire' b2 Futrie


31/32

#1!b! /$ontinued)

C(s !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 41,---inBler, C(&it(l /#-> o *#-,--- loss0 !!!!!!!!!! +,---Norris, C(&it(l /1->0 !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! #,---Ro'Bers, C(&it(l /"->0 !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 7,---

Futrie, C(&it(l /$->0 !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 1",---In;entor2!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 1-1,---In;entor2 is sol' wit loss (llo)(te' to &(rtners!

inBler, C(&it(l!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! #5,5--Norris, C(&it(l!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 11,.##Ro'Bers, C(&it(l!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! "#,774

C(s!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 41,---Abo;e entr2 'istributes (;(il(ble )(s ())or'inB to &re'istribution&l(n! AltouB *.4,--- in )(s is beinB el', *17,--- ust beret(ine' to &(2 li9ui'(tion e&enses! Te re(ininB *41,--- is'i;i'e' (onB inBler, Norris, (n' Ro'Bers on ( #-:1-:"- b(sis!A))or'inB to te &re'istribution &l(n, ( tot(l o *15-,--- ust be'i;i'e' on tis r(tio but onl2 *7#,7-- w(s (llo)(te' in tis (nnerin te irst 'istribution (bo;e! Tereore, (ll *41,--- /(@inB ( tot(lo *1#$,7--0 is &(i' out on tis #-:1-:"- b(sis!

inBler, C(&it(l /#-> o e&enses0!!!!!!!!!!!!!!!! #,#--Norris, C(&it(l /1->0!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 1,1--Ro'Bers, C(&it(l /"->0!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ","--Futrie, C(&it(l /$->0!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! $,$--

C(s!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 11,---Li9ui'(tion e&enses (re &(i'!

inBler, C(&it(l /#-37- o 'ei)it0!!!!!!!!!!!!!!!!!!!! ",-.-Norris, C(&it(l /1-37-0!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 7+#Ro'Bers, C(&it(l /"-37-0!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 1,#.4

Futrie, C(&it(l!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! $,17-To eliin(te te 'ei)it b(l(n)e o insol;ent &(rtner (s )o&ute'on te net &(Be!


32/32

#1!b! /$ontinued)

CAPITAL ACCOUNT %ALANCESRodgers,

Wingler, &orris, oan and :uthrie,Capital Capital Capital Capital

%eBinninB b(l(n)es!!!!!!!!!!!!!!!!! *1"-,--- *..,--- *1-+,--- *7-,---Loss on ())ounts re)ei;(ble! /$,+"-0 /1,7$-0 /#,".-0 /7,57-0Loss on l(n', buil'inB, (n'

e9ui&ent !!!!!!!!!!!!!!!!!!!!!!!!!!!!!! /#-,+--0 /1-,#--0 /"-,7--0 /$1,"--0C(s 'istribution!!!!!!!!!!!!!!!!!!!!! /#1,.--0 /5.,7--0 /5-,"--0 6-6Loss on in;entor2!!!!!!!!!!!!!!!!!!!! /+,---0 /#,---0 /7,---0 /1",---0C(s 'istribution!!!!!!!!!!!!!!!!!!!!! /#5,5--0 /11,.##0 /"#,7740 6-6Li9ui'(tion e&enses!!!!!!!!!!!!!! /#,#-- 0 /1,1-- 0 /","-- 0 /$,$-- 0

Subtot(l !!!!!!!!!!!!!!!!!!!!!!!!!!!!!! $,5.- 1,5"4 #,-5# /$,17-0Futrie insol;ent!!!!!!!!!!!!!!!!!!!!!! /",-.- 0 /7+# 0 /1,#.4 0 $,17-Current b(l(n)es!!!!!!!!!!!!!!!!!!!!!! *",5-- * .#$ *1,777 * 6-6

inBler, C(&it(l!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ",5--Norris, C(&it(l!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! .#$Ro'Bers, C(&it(l!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 1,777

C(s !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 5,---To 'istribute re(ininB )(s b(se' on in(l )(&it(l b(l(n)es!

chapter 15 advanced tutorial

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