The following condensed balance sheet is presented for the partnership of H,I,and J who share profits and losses in the ratio of 4:3:3,respectively:
The partners agree to liquidate the partnership after selling the other assets.
-Refer to the above information.If the other assets are sold for $200,000,how much should J receive upon liquidation?

Question

The following condensed balance sheet is presented for the partnership of H,I,and J who share profits and losses in the ratio of 4:3:3,respectively:
  The partners agree to liquidate the partnership after selling the other assets.
-Refer to the above information.If the other assets are sold for $200,000,how much should J receive upon liquidation?

Quizplus · Accepted Answer

First, we need to calculate the total capital of the partnership: 
$460,000 + $240,000 = $700,000

Since the partnership is liquidating, we need to distribute the assets to the partners according to their profit-sharing ratio. 
J's profit-sharing ratio is 3/10, so J would receive: 
($200,000 - $700,000) * 3/10 = -$21,000

Since J cannot receive a negative amount, the most J can receive is $20,000 (which is still less than their capital account balance of $240,000). Therefore, the best choice is C) $20,000.

The Following Condensed Balance Sheet Is Presented for the Partnership