The balance sheet of Ryan and Peter firm as on December 31,2017,is given below.

Ryan and Peter share profits in the ratio 3:2.They have decided to liquidate the partnership with immediate effect.The accounts payable were settled at $10,000 due to the poor financial condition of the partnership firm.As a result,Ryan's capital account will be credited by ________.
A)$6,000
B)$9,000
C)$1,800
D)$3,000

Question

The balance sheet of Ryan and Peter firm as on December 31,2017,is given below.

Ryan and Peter share profits in the ratio 3:2.They have decided to liquidate the partnership with immediate effect.The accounts payable were settled at $10,000 due to the poor financial condition of the partnership firm.As a result,Ryan's capital account will be credited by ________.
A)$6,000 
B)$9,000 
C)$1,800 
D)$3,000

Quizplus · Accepted Answer

C)When liabilities are settled at less than book value,the resulting profit is allocated to the partners in their existing profit-sharing ratio.
 11ea8a42_4f57_ccf6_8b44_cb76f67ed5ad_TB5024_00

The Balance Sheet of Ryan and Peter Firm as on December