Question

The balance sheet of Morgan and Rockwell was as follows immediately prior to the partnership's being liquidated: cash, $20,000; other assets, $160,000; liabilities, $40,000; Morgan capital, $60,000; Rockwell capital, $80,000. The other assets were sold for $139,000. Morgan and Rockwell share profits and losses in a 2:1 ratio. As a final cash distribution from the liquidation, Morgan will receive cash totaling Please show work!!!!!

a. $51,000

b. $46,000

c. $60,000

d. $49,500

Answer 1

Answer:

correct option is b. $46,000

Step-by-step explanation:

given data

cash, $20,000

other assets = $160,000

liabilities=  $40,000

Morgan capital = $60,000

Rockwell capital = $80,000

other assets sold = $139,000

profits and losses =  2:1

solution

we know here loss on sale is assets - assets sold

loss on sale = 160000 - 139000

loss on sale = $21000

and

Morgan share is = 21000 × $\frac{2}{3}$ = $14000

and Rockwell share is = 21000 × $\frac{1}{3}$ = $7000

now we find amount of cash that Morgan receive as final cash

final cash distribution is = Morgan capital - share is loss

final cash distribution  = 60000 - 14000 = $46000

so correct option is b. $46,000