Question

Hewitt and Patel are partners, sharing gains and losses equally. They decide to terminate their partnership. Prior to realization, their capital balances are $36,000 and $24,000, respectively. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $45,000.

What is the amount loss on realization?

Answer 1

The correct answer is $15,000.

Step-by-step explanation:

According to the scenario, the given data are as follows:

Capital balance of Hewitt = $36,000

Capital Balance of Patel = $24,000

After sale of Asset, Cash balance = $45,000

So, we can calculate the amount loss on realization by using following formula:

Amount loss on realization = ( Capital balance of Hewitt + Capital Balance of Patel) - Cash balance

By putting the value, we get

Amount loss on realization = ( $36,000 + $24,000) - $45,000

= $60,000 - $45,000

= $15,000