A local partnership has assets of cash of $130,000 and land recorded at $700,000. All liabilities have been paid and the partners are all personally insolvent. The partners' capital accounts are as follows Roberts, $500,000, Ferry, $300,000 and Mones, $30,000. The partners share profits and losses 5:3:2.
-If the land is sold for $450,000, how much cash will Roberts receive in the final settlement?

Question

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The total cash available after selling the land is $580,000 ($130,000 cash + $450,000 from land sale). The loss on the land sale is $250,000 ($700,000 - $450,000) and is shared among the partners in the ratio 5:3:2. Roberts' share of the loss is $125,000 (5/10 of $250,000). His capital account after the loss is $375,000 ($500,000 - $125,000). Since the total cash available is $580,000, Roberts receives $362,500, which is his adjusted capital account balance.

A Local Partnership Has Assets of Cash of $130,000 and Land