A local partnership has assets of cash of $130,000 and land recorded at $700,000. All liabilities have been paid and the partners are all personally insolvent. The partners' capital accounts are as follows Roberts, $500,000, Ferry, $300,000 and Mones, $30,000. The partners share profits and losses 5:3:2.
If the land is sold for $450,000, how much cash will Roberts receive in the final settlement?

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Quizplus · Accepted Answer

R = $500,000; F = $300,000; M = $30,000 with Losses Shared 5:3:2First eliminate M Balance of $30,000 in $250,000 LossLosses now shared 5/8 & 3/8R = $500,000 - ($220,000 × 5/8) $137,500 = $362,500F = $300,000 - ($220,000 × 3/8) $82,500 = $217,500

A Local Partnership Has Assets of Cash of $130,000 and Land