The balance sheet of Morgan and Rockwell was as follows immediately prior to the partnership's being liquidated: cash, $20,000; other assets, $160,000; liabilities, $40,000; Morgan capital, $60,000; Rockwell capital, $80,000. The other assets were sold for $139,000. Morgan and Rockwell share profits and losses in a 2:1 ratio. As a final cash distribution from the liquidation, Morgan will receive cash totaling

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After selling the other assets for $139,000, the total cash available is $159,000 ($20,000 initial cash + $139,000 from asset sale). After paying liabilities of $40,000, $119,000 remains. Morgan and Rockwell's capital accounts total $140,000 ($60,000 + $80,000). The loss from the asset sale is $21,000 ($160,000 - $139,000), shared in a 2:1 ratio, so Morgan absorbs $14,000 and Rockwell $7,000. Morgan's adjusted capital is $46,000 ($60,000 - $14,000), which is the cash Morgan will receive.

The Balance Sheet of Morgan and Rockwell Was as Follows