Answer:
LMNO Partnership
Larry will receive $72,500 in return for his partnership interest.
Explanation:
a) Data and Calculations:
Assets Liabilities
Cash $ 100,000
Land 200,000
Total assets = $300,000
Notes Payable $50,000
Equity:
Larry, Capital $60,000
Marge, Capital 70,000
Nancy, Capital 80,000
Owen, Capital 40,000
Total equity = $250,000
Total equity and liabilities = $300,000
Profit and loss sharing = equally (25% each)
Cash balance after the sale of land and settlement of debt:
Cash balance                     $100,000
Sale of land                      $250,000
Settlement of notes payable          (50,000)
Balance to be distributed to partners $300,000
Statement of capital liquidation:
                   Larry    Marge    Nancy     Owen     Total
Capital accounts    $60,000  $70,000  $80,000   $40,000  $250,000
Profit from land sale  12,500    12,500   12,500     12,500     50,000
Capital balances    $72,500  $82,500  $92,500   $52,500  $300,000
Cash distribution   ($72,500) ($82,500) ($92,500) ($52,500) ($300,000)
Capital balances         $0       $0       $0       $0        $0
