Dancey, Reese, Newman, and Jahn were partners who shared profits and losses on a 4:2:2:2 basis, respectively. They were beginning to liquidate their business. At the start of the process, capital balances were as follows: $$\begin{array} { l r }
\text { Dancey, capital } & \$ 72,000 \
\text { Reese, capital } & 32,000 \
\text { Newman, capital } & 52,000 \
\text { Jahn, capital } & 24,000
\end{array}$$
Which one of the following statements is true for a predistribution plan?

Question

Dancey, Reese, Newman, and Jahn were partners who shared profits and losses on a 4:2:2:2 basis, respectively. They were beginning to liquidate their business. At the start of the process, capital balances were as follows: $$\begin{array} { l r } 
\text { Dancey, capital } & \$ 72,000 \
\text { Reese, capital } & 32,000 \
\text { Newman, capital } & 52,000 \
\text { Jahn, capital } & 24,000
\end{array}$$
Which one of the following statements is true for a predistribution plan?

Quizplus · Accepted Answer

The first available $16,000 would go to Newman because Newman has the second highest capital balance and is entitled to 2/8 of the profits and losses.

Dancey, Reese, Newman, and Jahn Were Partners Who Shared Profits