A local partnership is liquidating and has only two assets (cash of $10,000 and land with a cost of $35,000). All partnership liabilities have been paid. All partners are personally insolvent. The partners have capital balances and share profits and losses as follows.If the land is sold for $25,000, how much cash does each partner receive in a final settlement?If the land is sold for $15,000, how much cash does each partner receive in a final settlement?If the land is sold for $5,000, how much cash does each partner receive in a final settlement? Brown, capital (40%).Fish, capital (30%)..Stone, capital (30%)$ 25,0005,000

Answered: Brown, capital (40%). Fish, capital…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A local partnership is liquidating and has only two assets (cash of $10,000 and land with a cost of $35,000). All partnership liabilities have been paid. All partners are personally insolvent. The partners have capital balances and share profits and losses as follows.

If the land is sold for $25,000, how much cash does each partner receive in a final settlement?
If the land is sold for $15,000, how much cash does each partner receive in a final settlement?
If the land is sold for $5,000, how much cash does each partner receive in a final settlement?

Brown, capital (40%).
Fish, capital (30%)..
Stone, capital (30%)
$ 25,000
5,000

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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