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Y and Z have capital balances of $80, 000, $180,000 and $60,000 respectively. Immediately prior to liquidation.  Total remaining assets have a book value of $320,000 and assume liabilities have been paid. There is one remaining asset with a fair market value of $70,000. All three partners agree to share profit and loss equally. Z wishes to take the asset with him and start a new business and would accept $70,000 in cash; the remaining partners a

Y and Z have capital balances of $80, 000, $180,000 and $60,000 respectively. Immediately prior to liquidation.  Total remaining assets have a book value of $320,000 and assume liabilities have been paid. There is one remaining asset with a fair market value of $70,000. All three partners agree to share profit and loss equally. Z wishes to take the asset with him and start a new business and would accept $70,000 in cash; the remaining partners a

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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1.

Partners X, Y and Z have capital balances of $80, 000, $180,000 and $60,000 respectively. Immediately prior to liquidation.  Total remaining assets have a book value of $320,000 and assume liabilities have been paid. There is one remaining asset with a fair market value of $70,000. All three partners agree to share profit and loss equally. Z wishes to take the asset with him and start a new business and would accept $70,000 in cash; the remaining partners agree this would be fair. How much cash in addition to the asset would first be distributed to Z before any of the other partners receive anything?

a.

​$30,000

b.

​$100,000

c.

​$240,000

d.

​$50,000

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