Use the following account balance information for Grinotfin Partnership with income ratios of 2:4:4 for Grigsby, Nott, and Fine, respectively. Assume that, as part of liquidation proceedings, Grinotfin sells its noncash assets for $170,000. The amount of cash that would ultimately be distributed to Fine would be:

Question

Use the following account balance information for Grinotfin Partnership with income ratios of 2:4:4 for Grigsby, Nott, and Fine, respectively.  Assume that, as part of liquidation proceedings, Grinotfin sells its noncash assets for $170,000. The amount of cash that would ultimately be distributed to Fine would be:

Quizplus · Accepted Answer

First, we need to find the total income for Grinotfin Partnership using the given income ratios:

Grigsby's share = 2/(2+4+4) x $170,000 = $34,000 
Nott's share = 4/(2+4+4) x $170,000 = $68,000 
Fine's share = 4/(2+4+4) x $170,000 = $68,000

Next, we need to add each partner's share of the current cash balance to the income portion calculated above:

Grigsby's total = $20,000 + $34,000 = $54,000 
Nott's total = $50,000 + $68,000 = $118,000 
Fine's total = $26,000 + $68,000 = $94,000

Since the total distribution is $170,000 (noncash assets) + $100,000 (total cash balance) = $270,000, we can determine Fine's share by subtracting the total of Grigsby and Nott's shares from the total distribution:

Fine's share = $270,000 - $54,000 - $118,000 = $98,000

However, Fine has an outstanding loan balance of $4,000 to the partnership that must be deducted from his share:

Fine's final distribution = $98,000 - $4,000 = $94,000

Therefore, the answer is B, $96,000.

Use the Following Account Balance Information for Grinotfin Partnership with Income