In: Accounting
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.
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.