The following balance sheet summary, together with residual profit-sharing ratios, was developed on April 1, 2011, when the Doc, Fae, and Hal partnership began its liquidation: Cash $140,000 Liabilities $ 60,000 Accounts receivable 60,000 Loan from Fae 20,000 Inventories 85,000 Doc capital (20%) 75,000 Plant assets—net 200,000 Fae capital (40%) 200,000 Loan to Doc 25,000 Hal capital (40%) 155,000 $510,000 $510,000 If available cash except for a $5,000 contingency fund is distributed immediately, Doc, Fae, and Hal, respectively, should receive: a. $0, $60,000, and $15,000 b. $11,000, $22,000, and $22,000 c. $0, $70,000, and $5,000 d. $0, $27,500, and $27,500
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is 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, drawings of a partner, etc.
The following
|
Cash |
$140,000 |
Liabilities |
$ 60,000 |
|
|
60,000 |
Loan from Fae |
20,000 |
|
Inventories |
85,000 |
Doc capital (20%) |
75,000 |
|
Plant assets—net |
200,000 |
Fae capital (40%) |
200,000 |
|
Loan to Doc |
25,000 |
Hal capital (40%) |
155,000 |
|
$510,000 |
$510,000 |
||
If available cash except for a $5,000 contingency fund is distributed immediately, Doc, Fae, and Hal, respectively, should receive:
a. $0, $60,000, and $15,000
b. $11,000, $22,000, and $22,000
c. $0, $70,000, and $5,000
d. $0, $27,500, and $27,500
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