On December 1,20X9,the partners of Tim,Williams,and Levin,who share profits and losses in the ratio of 4:4:2,decided to liquidate their partnership.On this date the partnership condensed balance sheet was as follows: On December 11,20X9,the first cash sale of other assets with a carrying amount of $200,000 realized $140,000.Safe installment payments to the partners were made on the same date.How much cash should be distributed to each partner?

Question

On December 1,20X9,the partners of Tim,Williams,and Levin,who share profits and losses in the ratio of 4:4:2,decided to liquidate their partnership.On this date the partnership condensed balance sheet was as follows:

On December 11,20X9,the first cash sale of other assets with a carrying amount of $200,000 realized $140,000.Safe installment payments to the partners were made on the same date.How much cash should be distributed to each partner?

Quizplus · Accepted Answer

To determine the amount of cash that should be distributed to each partner, we need to follow these steps:

1. Calculate the total amount of cash available for distribution. This is equal to the cash balance shown on the condensed balance sheet plus the cash received from the sale of assets, which is $800,000 + $140,000 = $940,000.

2. Allocate the total amount of cash according to the profit and loss sharing ratio, which is 4:4:2. This means that Tim and Williams each receive 4/10 of the total cash, and Levin receives 2/10. So:

- Tim: 4/10 x $940,000 = $376,000
- Williams: 4/10 x $940,000 = $376,000
- Levin: 2/10 x $940,000 = $188,000

Therefore, the answer is choice C).

On December 1,20X9,the Partners of Tim,Williams,and Levin,who Share Profits and Losses