Question

A partnership has the following balance sheet prior to liquidation (partners’ profit and loss ratios are in parentheses):Cash $ 33,000 Liabilities $ 50,000Other assets 100,000 Playa, capital (40%) 24,000Bahia, capital (30%) 29,000Arco, capital (30%) 30,000Total $ 133,000 Total $ 133,000During liquidation, other assets are sold for $80,000, liabilities are paid in full, and $15,000 in liquidation expenses are paid. What amount of cash does each partner receive as a result of this liquidation?Multiple ChoicePlaya, $16,000; Bahia, $23,000; Arco, $24,000.Playa, $19,200; Bahia, $14,400; Arco, $14,400.Playa, $6,000; Bahia, $4,500; Arco, $4,500.Playa, $10,000; Bahia, $18,500; Arco, $19,500.

Answer 1

Playa, $10,000; Bahia, $18,500; Arco, $19,500.

Step-by-step explanation:

Cash $33,000

Other assets $100,000

Total $133,000

Liabilities $50,000

Playa, capital (40%) $24,000

Bahia, capital (30%) $29,000

Arco, capital (30%) $30,000

Total $133,000

other assets sold for $80,000 resulting in a $20,000 loss

cash = $33,000 + $80,000 = $113,000

- liabilities ($50,000)

$63,000

- liquidation expenses ($15,000)

remaining cash $48,000

total loss = $20,000 + $15,000 = $35,000

partners' share of loss:

Playa = $14,000

Bahia = $10,500

Arco = $10,500

remaining capital accounts:

Playa = $24,000 - $14,000 = $10,000

Bahia = $29,000 - $10,500 = $18,500

Arco = $30,000 - $10,500 = $19,500