Multiple Choice Questions
In a partnership liquidation, how is the final allocation of business assets made to the partners?
according to the profit and loss ratio
according to the balances of the partners’ loan and capital accounts
according to the initial investments made by the partners
according to the method stipulated by the partnership agreement
A partnership is in the process of liquidating and is currently reporting the following capital balances.
Marla, Capital (50% share of all profits and losses)
Barbara, Capital (30%)
Roberta, Capital (20%)
Roberta has indicated that the $24,000 deficit will be covered by a forthcoming contribution.
However, the two remaining partners have asked to receive the $116,000 in cash that is presently
available. How much of this money should each partner be given?
A partnership is considering the possibility of liquidation because one of the partners, Thomas, is
insolvent. Capital balances at the current time are as follows, and profits and losses are divided on a
6:3:1 basis, respectively.
Thomas’ creditors have filed a $40,000 claim against the partnership’s assets. The partnership
currently holds assets reported at $300,000 and liabilities of $100,000. If the assets can be sold for
$125,000, what is the minimum amount that Thomas’ creditors would receive?