Question

Carney, Pierce, Menton, and Hoehn are partners who share profits and losses on a 4:3:2:1 basis,...

Carney, Pierce, Menton, and Hoehn are partners who share profits and losses on a 4:3:2:1 basis, respectively. They are beginning to liquidate the business. At the start of this process, capital balances are

Carney, capital $ 66,000
Pierce, capital 28,800
Menton, capital 49,000
Hoehn, capital 21,800

Which of the following statements is true?

Multiple Choice

a. Carney will collect a portion of any available cash before Hoehn receives money.

b. Carney will be the last partner to receive any available cash.

c. The first available $3,800 will go to Hoehn.

d. The first available $5,400 will go to Menton.

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Answer #1
Answer is d. The first availabel wil go to Menton $ 5400
Explanation:
Carney Perce Menton Hoehn
Capital 66000 28800 49000 21800
Profit or loss sharing ratio 4 3 2 1
Capital for one share 16500 9600 24500 21800
Capital which shoud have been 38400 28800 19200 9600
(Take perce as base)
Excess capital 27600 0 29800 12200
Carney Menton Hoehn
Capital 66000 49000 21800
Profit or loss ratio 4 2 1
Capiital for one share 16500 24500 21800
Capital which should be 66000 33000 16500
(Carney as base)
Excess capital 0 16000 5300
Menton Hoehn
Capital 49000 21800
Profit or loss ratio 2 1
Capiital for one share 24500 21800
Capital which should be 43600 21800
(Hoehn as base)
Excess capital 5400 0
Hence, Menton must be paid first $ 5400
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