The partnership of Brandon and Ryan is being liquidated. All gains and losses are shared in a 3:1 ratio, respectively. Before liquidation, their balance sheet balances are as follows:
Cash $10,000
Other Assets 8,000
Liabilities 4,000
Brandon, Capital 7,000
Ryan, Capital 7,000
a. If the Other Assets are sold for $10,000, how much will each partner receive before paying liabilities and distributing the remaining assets?
b. If the Other Assets are sold for $8,000, how much will each partner receive before paying liabilities and distributing remaining assets?
Answer:
a; Brandon will receive $1500
Ryan will receive $500
Step-by-step explanation:
The Gain from sales of other assets of $2000 will be shared in the agreed ration 3/4 for Brandon and 1/4 for Ryan.
After which the liabilities will be settled and the balance cash shared in the ration of the Partners capital.
Answer:
b; Brandon will receive $0
Ryan will receive $0
Step-by-step explanation:
No gains from the sales of other assets which means nothing to receive.
Liabilities will be settled and the remaining cash distributed in the ration of the partner's capital contributions