Table 12-10
M, N, and O are partners in the Drain Company and share profits in a 3:3:2 ratio, respectively. They have decided to liquidate their business. At the start of the liquidation, their capital account balances were $50,000, $25,000, and $25,000, respectively. After the disposal of all noncash assets and the payment of all debts, cash of $90,000 remains to be distributed to the partners.
-Refer to Table 12-10.The amount of cash O should receive in the liquidation of the Drain Company is:

Question

Quizplus · Accepted Answer

To determine the amount of cash that O should receive, you need to first calculate the total amount of capital in the partnership. 
M+N+O = $50,000 + $25,000 + $25,000 = $100,000 
Then, you need to calculate the total amount of cash that O should receive based on the original ratio: 
O's share = ($100,000 * 2/8) = $25,000 
However, since there is only $90,000 in cash to distribute, each partner will receive a proportion of their original share based on the total remaining cash. 
O's share of the remaining cash = $90,000 * (2/8) = $22,500. 
Therefore, the answer is C.

Table 12-10 M, N, and O Are Partners in the Drain Company