Partners David and Goliath have decided to liquidate their business.The following information is available:
David and Goliath share profits and losses in a 3:1 ratio,respectively.During the first month of liquidation,half the inventory is sold for $70,000,and $50,000 of the accounts payable are paid.During the second month,the rest of the inventory is sold for $55,000,and the remaining accounts payable are paid.Cash is distributed at the end of each month,and the liquidation is completed at the end of the second month.
-Refer to the information provided above.Using a safe payment schedule,how much cash will be distributed to David at the end of the first month?

Question

Partners David and Goliath have decided to liquidate their business.The following information is available:
  David and Goliath share profits and losses in a 3:1 ratio,respectively.During the first month of liquidation,half the inventory is sold for $70,000,and $50,000 of the accounts payable are paid.During the second month,the rest of the inventory is sold for $55,000,and the remaining accounts payable are paid.Cash is distributed at the end of each month,and the liquidation is completed at the end of the second month.
-Refer to the information provided above.Using a safe payment schedule,how much cash will be distributed to David at the end of the first month?

Quizplus · Accepted Answer

Without specific details on the safe payment schedule or the context of David's situation, it's impossible to accurately determine why $42,500 is the correct amount for distribution to David at the end of the first month. The answer could relate to a predefined agreement, a profit-sharing scheme, or another financial arrangement.

Partners David and Goliath Have Decided to Liquidate Their Business