Winchester, Wesson & Smith are dissolving their partnership. Their agreement allocates profits and losses 40:30:30 respectively. The ending capital balances are Winchester $45,000; Wesson
$25,000 and Smith $13,000. After all assets are liquidated and liabilities paid, there is $12,000 in cash to be distributed. Smith's share of the excess cash is

Question

Quizplus · Accepted Answer

Smith's share of the excess cash is calculated based on his profit and loss sharing ratio, which is 30%. Therefore, 30% of $12,000 is $3,600.

Winchester, Wesson & Smith Are Dissolving Their Partnership