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Arlene, Brad, and Chick are partners, sharing income 2:1:2. After selling all of the noncash assets...

Arlene, Brad, and Chick are partners, sharing income 2:1:2. After selling all of the noncash assets for cash, dividing gains and losses on realization, and paying liabilities, the balances in the capital accounts are as follows: Arlene, $20,000 Credit; Brad, $10,000 Credit; and Chick, $30,000 Credit. How much cash should be distributed to Arlene?

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?

The capital balances in the ABC partnership shows a credit balance for partners A & B. Partner C, however, has a debit balance of $9,000. The partners’ income sharing ratio is 3:5:2. Partner C is unable to eliminate his capital deficiency. By how much must partner A reduce his capital to offset partner  C's capital deficiency?

Dauber and Jackson decide to organize a partnership. Dauber invests $25,000 cash. Jackson invests equipment with a book value of $15,000 and a fair market value of $25,000. How much is assigned to Jackson Capital?

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Answer #1

A.THE AMOUNT OF CASH SHOULD BE DISTRIBUTED TO ARLENE WILL BE:

ARLENE SHARE IN FIRM -= 2/5

TOTAL CAPITAL INVESTED IN FIRMS BY ARLENE , BRAD AND CHICK = $20000+ $10000

+$30000 = $60000

AS PER ARLENE SHARE THE CASH SHOULD BE DISTRIBUTED TO HIM = $60000 * 2/5 = $24000

B.TO ELIMINATE CAPITAL DEFICIENCY OF C ,C NEEDS TO INVEST 2/9 OF TOTAL DEFICIENCY AS PER HIS SHARE.

TOTAL DEFICIECY IS $19000

THEREFORE, THE AMOUNT THAT C NEEDS TO INVEST TO REMOVE HIS CAPITAL DEFICIENCY = $19000 * 2/9 = $4222.

C. C's share in firm is 2/10.

total debit balance in firm = $9000

C's share in loss = $9000* 2/10 = 1800

therefore, to offset C's capital deficiency A needs to reduce his capital by $1800

D. As the equipment that jackson invested in firm having $15000 as book value.

therefore, the capital assigned to jackson's capital account is $15000 irrespective of its fair market value.

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