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In: Accounting

Carney, Pierce, Menton, and Hoehn are partners who share profits and losses on a 4:3:2:1 basis,...

Carney, Pierce, Menton, and Hoehn are partners who share profits and losses on a 4:3:2:1 basis, respectively. They are beginning to liquidate the business. At the start of this process, capital balances are

Carney, capital $ 71,000
Pierce, capital 30,300
Menton, capital 54,000
Hoehn, capital 23,300

Which of the following statements is true?

The first available $7,400 will go to Menton.

Carney will be the last partner to receive any available cash.

Carney will collect a portion of any available cash before Hoehn receives money.

The first available $5,300 will go to Hoehn.

Solutions

Expert Solution

particulars carney perce menton hoehn
capital balance 71000 30300 54000 23300
profit and loss sharing ratio 4 3 2 1
capital balance for one share
(capital balance / ratio)		 17750 10100 27000 23300
capital which should be (perce) 40400 0 20200 10100
excess capital
(capital balance - capital should be)		 30600 0 33800 13200
particulars carney menton hoehn
capital balance 71000 54000 23300
profit and loss sharing ratio 4 2 1
capital balance for one share
(capital balance / ratio)		 17750 27000 23300
capital which should be (carney) 0 35500 17750
excess capital
(capital balance - capital which should be)		 0 18500 5550
particulars menton hoehn
capital balance 54000 23300
profit and loss sharing ratio 2 1
capital balance for one share
(capital balance / ratio)		 27000 23300
capital which should be (hoehn) 46600 0
excess
(capital balance - capital which should be)		 7400 0

Therefore, the first available $ 7400 will go to menton.

ekkarill92 answered 2 years ago
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