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

Ryan,Peter,and James share profits in the ratio 3:2:1.They have decided to liquidate the partnership with immediate effect.The furniture and the equipment were sold at a cumulative loss of $7,000.The accounts receivable were received in cash and the other assets were written off as worthless.The accounts payable and other liabilities were paid off at book value.James argued that he should receive a portion of the remaining cash,but Peter and Ryan argued otherwise.How much cash should James receive or pay?
A)He should receive $500.
B)He should not receive or pay any money.
C)He should pay $54,833.
D)He should pay $833.

Question

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

Ryan,Peter,and James share profits in the ratio 3:2:1.They have decided to liquidate the partnership with immediate effect.The furniture and the equipment were sold at a cumulative loss of $7,000.The accounts receivable were received in cash and the other assets were written off as worthless.The accounts payable and other liabilities were paid off at book value.James argued that he should receive a portion of the remaining cash,but Peter and Ryan argued otherwise.How much cash should James receive or pay?
A)He should receive $500. 
B)He should not receive or pay any money. 
C)He should pay $54,833. 
D)He should pay $833.

Quizplus · Accepted Answer

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James has to pay $833 to meet the deficit in his capital account.
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The Balance Sheet of Ryan,James and Peter Firm as on December