Question

Ames and Barton are partners who share income in the ratio of 1:2 and have capital balances of $46,000 and $74,000, 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 $84,000. What amount of loss on realization should be allocated to Barton?

Answer 1

$24,000

Step-by-step explanation:

The computation of the loss on realization is shown below:

The Total Capital Balance of Ames and Barton is

= $46,000 + $74,000

= $120,000

And, the non cash assets is $84,000

So, the total loss would be

= $120,000 - $84,000

= $36,000

Also the ratio is 1:2

So, for Barton it would be

= $36,000 × 2 ÷ 3

= $24,000