Partners Roger and Martin each have $3,000 capital balances and share income and losses in a 2:1 ratio,respectively.Cash equals $1,000,noncash assets total $10,000,and liabilities are $5,000.If all the noncash assets are sold for $7,000,Martin's capital account will:

Question

Quizplus · Accepted Answer

The loss on the sale of noncash assets is $3,000 ($10,000 - $7,000). Martin's share of the loss is $1,000 (1/3 of $3,000), so his capital account decreases by $1,000.

Partners Roger and Martin Each Have $3,000 Capital Balances and Share