Partners Eric and Jeremy each have $3,000 capital balances and share income and losses in a 2:1 ratio,respectively.Cash equals $1,000,noncash assets are $10,000,and liabilities are $5,000.If all the noncash assets are sold for $4,000,and each partner is personally insolvent,Jeremy eventually will receive cash of:

Question

Quizplus · Accepted Answer

After selling the noncash assets for $4,000, the total cash available is $5,000 ($1,000 existing cash + $4,000 from the sale). The liabilities are $5,000, which must be paid off first, leaving no cash available to distribute to the partners, including Jeremy. Therefore, Jeremy will receive $0.

Partners Eric and Jeremy Each Have $3,000 Capital Balances and Share