Answered: As of December 31, 2020, the books of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

As of December 31, 2020, the books of ABC partnership showed capital balances of A 60,000; B 30,000 and C 5,000. The partnership's profit or loss ratio was 5:3:2, respectively. The partners decided to liquidate and they sold all non-cash assets for 40,000. After the settlement of all liabilities amounting to 10,000, they still have cash of 20,000 left for distribution.

Assuming that any capital debit balance is uncollectible, determine payment to partners A, B, and C at the end of liquidation.

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

Expert Solution