Complete Question:
The Abrams, Bartle, and Creighton partnership began the process of liquidation with the following balance sheet:
Cash 16,000
Noncash asset 434,000
Total- 450,000
Liability-150000
Abrams-80,000
Bartle- 90,000
Creighton-130,000
total- 450,000
Abrams, Bartle, and Creighton share profits and losses in a ratio of 3:2:5. Liquidation expenses are expected to be $12,000.
After the liquidation expenses of $12,000 were paid and the noncash assets sold, Creighton had a deficit of $8,000. For what amount were the noncash assets sold? Show your work.
Answer:
Amount for which the noncash assets were sold = $170,000
Explanation:
Creighton's capital = $130,000
Creighton had a deficit of $8,000 that means total loss to Creighton = $130,000 + $8,000
= $138,000
Creighton profits and losses ratio = 5/10
Hence total loss to all partners = $138,000 * (10/5) = $276,000
After the liquidation expenses paid , reamining cash = $16,000 - $12,000 =$4,000
Amount for which the noncash assets were sold = $450,000 - ( $276,000 + $4,000)
= $450,000 - $280,000
= $170,000
