Question

In liquidation, just prior to the final distribution of cash to the partners, the balance in the Cash account is $600,000; The partners have capital balances as follows: Presley, $290,000 credit; Laswell, $250,000 credit, and Hunter, $60,000 credit. The income ratio is 6:2:2, respectively. How much cash should be distributed to Presley?

Partners Audrey, Betty, and Charles have capital account balances of $210,000 each. The income and loss ratio is 5:2:3, respectively. In the process of liquidating the partnership,noncash assets with a book value of $150,000 are sold for $60,000. The balance of Betty's Capital account after the sale is:

A sole proprietorship cannot combine with an existing partnership to form a new partnership.

Brekke and Fig decide to organize a partnership. Brekke invests $30,000 cash, and Fig contributes $24,000 cash and equipment having a book value of $12,000. Choose the entry to record Fig’s investment in the partnership assuming the equipment has a fair value of $18,000.

The capital balances in the ABC partnership shows a credit balance for partners A & B. Partner C, however, has a debit balance of $19,000. The partners’ income sharing ratio is 4:3:2. How much must partner C invest in the partnership to eliminate his capital deficiency?

Answer 1

1) Cash distributed to presely=$ 3,60,000 (6,00,000*6/10)

Profit Sharing Ratio is 6:2:2

2) The Balance of betty's capital A/c=$ 1,90,000

Working: Betty's capital- loss on realisation of asset

2,10,000-18,000

loss on realisation=1,50,000-60,000 (cost of asset-Sale value)

=90,000

betty's share of loss=90,000*2/10

3) Cash A/c Dr. 24,000

Equipment A/c Dr. 12,000

To Fig's Capital A/c 36,000

(For cash and equipment introduced as capital)

4) C should invest greater that $ 19,000 to eliminate his capital deficiency.