The following condensed balance sheet is presented for the partnership of Cooke,Dorry,and Evans who share profits and losses in the ratio of 4:3:3,respectively:

Assume that the partners decide to liquidate the partnership.If the other assets are sold for $600,000,how much of the available cash should be distributed to Cooke?

Question

The following condensed balance sheet is presented for the partnership of Cooke,Dorry,and Evans who share profits and losses in the ratio of 4:3:3,respectively:

Assume that the partners decide to liquidate the partnership.If the other assets are sold for $600,000,how much of the available cash should be distributed to Cooke?

Quizplus · Accepted Answer

To determine the amount of cash to be distributed to Cooke, we need to first calculate the total assets available for distribution.

Total assets available for distribution = Cash + Other assets sold 
= $238,000 + $600,000 
= $838,000

Next, we need to determine each partner's share of the total assets based on their profit sharing ratio:

Cooke's share = 4/10 x $838,000 = $335,200 
Dorry's share = 3/10 x $838,000 = $251,400 
Evans' share = 3/10 x $838,000 = $251,400

Finally, we need to subtract Cooke's capital balance from her share of the total assets to determine how much cash she should receive:

Cash to be distributed to Cooke = Cooke's share - Cooke's capital balance 
= $335,200 - $153,200 
= $182,000

Therefore, the answer is C ($182,000).

The Following Condensed Balance Sheet Is Presented for the Partnership