Question

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After several years of business, Abel, Barney, and Cole are liquidating. The following are post-closing account balances.
Cash 18,000
Inventory 73,000
Other assets 157,000
Accounts Payable 61,000
Abel, Capital 50,000
Barney, Capital 50,000
Cole, Capital 87,000

Non-cash assets are sold for $275,000. Profits and losses are shared equally.
After all liabilities are paid, divide the remaining cash amongst the partners.

Answer 1

Answer:

Please see the answer below:

Explanation:

Balance of Non-Cash Assets = Sale Price - Cost Price

Balance of Non-Cash Assets = $275,000 - ($73,000 + $157,000)

Balance of Non-Cash Assets = $275,000 - $230,000 = $45,000

The Balance on Other Assets sold should be divided equally:

Abel = $50,000 + [$45,000 x 1 / 3] = $50,000 + $15,000 = $65,000

Barney = $50,000 + [$45,000 x 1 / 3] = $50,000 + $15,000 = $65,000

Cole = $87,000 + [$45,000 x 1 / 3] = $87,000 + $15,000 = $102,000