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 cash distribution to each partner, we need to follow the ratio of profit sharing, which is 4:4:2 for Tim, Williams, and Levin, respectively.

First, we need to adjust the carrying amount of the other assets by deducting the realized amount from the first cash sale:

Carrying amount of other assets = $400,000 - $200,000 = $200,000

Next, we need to deduct the liabilities from the remaining assets to get the total assets available for distribution:

Total assets = ($200,000 + $500,000 + $800,000) - $450,000 = $1,050,000

Now, we can calculate the total amount to be distributed to the partners based on their profit-sharing ratios:

Tim's share = (4/10) x $1,050,000 = $420,000
Williams's share = (4/10) x $1,050,000 = $420,000
Levin's share = (2/10) x $1,050,000 = $210,000

Finally, we need to deduct the installment payments already made to each partner from their respective shares:

Tim's cash distribution = $420,000 - $140,000 = $280,000
Williams's cash distribution = $420,000 - $140,000 = $280,000
Levin's cash distribution = $210,000 - $140,000 = $70,000

Therefore, the correct answer is option C.

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