The year-end balance sheet and residual profit and loss sharing percentages for the Gary, Harold, and Ivan partnership on December 31, 2014, are as follows: Cash $ 60,000 Accounts payable $ 150,000 Loan to Gary 50,000 Loan from Harold 50,000 Other assets 360,000 Gary, capital (25%) 70,000 Harold, capital (25%) 80,000 Ivan, capital (50%) 120,000 Total assets $ 470,000 Total liab./equity $ 470,000 The partners agree to liquidate the business and distribute cash when it becomes available. A cash distribution plan is developed with vulnerability rankings for the Gary, Harold and Ivan partnership. After outside creditors are paid, the cash available will initially go to A. Gary in the amount of $20,000. B. Ivan in the amount of $40,000. C. Harold in the amount of $50,000. D. Harold in the amount of $70,000.
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is 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, drawings of a partner, etc.
The year-end
Cash $ 60,000 Accounts payable $ 150,000
Loan to Gary 50,000 Loan from Harold 50,000
Other assets 360,000 Gary, capital (25%) 70,000
Harold, capital (25%) 80,000
Ivan, capital (50%) 120,000
Total assets $ 470,000 Total liab./equity $ 470,000
The partners agree to liquidate the business and distribute cash when it becomes available. A cash distribution plan is developed with vulnerability rankings for the Gary, Harold and Ivan partnership. After outside creditors are paid, the cash available will initially go to
| A. |
Gary in the amount of $20,000. |
|
| B. |
Ivan in the amount of $40,000. |
|
| C. |
Harold in the amount of $50,000. |
|
| D. |
Harold in the amount of $70,000. |
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