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Gonda, Herron, and Morse is considering possible liquidation because partner Morse is personally insolvent. The partners have the following capital account balances: $60,000, $70,000, and $40,000, respectively, and share profits and losses 30%, 45%, and 25%, respectively. The partnership has $200,000 in noncash assets that can be sold for $150,000. The partnership has $10,000 cash on hand, and $40,000 in liabilities. What is the minimum that partner Morse’s creditors would receive if they have filed a claim for $50,000? A. $0 B. $27,500 C. $45,000 D. $47,500 E. $50,000

Gonda, Herron, and Morse is considering possible liquidation because partner Morse is personally insolvent. The partners have the following capital account balances: $60,000, $70,000, and $40,000, respectively, and share profits and losses 30%, 45%, and 25%, respectively. The partnership has $200,000 in noncash assets that can be sold for $150,000. The partnership has $10,000 cash on hand, and $40,000 in liabilities. What is the minimum that partner Morse’s creditors would receive if they have filed a claim for $50,000? A. $0 B. $27,500 C. $45,000 D. $47,500 E. $50,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Gonda, Herron, and Morse is considering possible liquidation because partner Morse is personally insolvent. The partners have the following capital account balances: $60,000, $70,000, and $40,000, respectively, and share profits and losses 30%, 45%, and 25%, respectively. The partnership has $200,000 in noncash assets that can be sold for $150,000. The partnership has $10,000 cash on hand, and $40,000 in liabilities. What is the minimum that partner Morse’s creditors would receive if they have filed a claim for $50,000?

A. $0

B. $27,500

C. $45,000

D. $47,500

E. $50,000

 
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