Question

Alpha and Beta are partners who share income in the ratio of 1:2 and have capital balances of $42,600 and $88,200, respectively, at the time they decide to terminate the partnership. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $77,700. What amount of loss on realization should be allocated to Alpha

Answer 1

The amount of loss to Alpha is $17700.

Step-by-step explanation:

Given income sharing ratio = 1:2

The capital balance of Alpha = $42600

The capital balance of Beta = $88200

Total capital balance (Alpha + Beta)
`= $42600 + $88200 = $130800`

The cash balance available = $77700

Loss = 130800 – 77700 = $ 53100

The share of loss allocated to Alpha:

`= 53100 * (1)/(3) \\= $17700`

Therefore, the amount of loss to Alpha is $17700.