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Part A
(5 points each for a possible total of 10 points)
1. 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
Noncash assets are sold for $275,000. Profits and losses are shared
equally.
After all liabilities are paid, divide the remaining cash amongst the
partners.
2. The partnership of Brandon and Ryan is being liquidated. All gains and
losses are shared in a 3:1 ratio, respectively. Before liquidation, their
balance sheet balances are as follows:
Cash $10,000
Other Assets 8,000
Liabilities 4,000
Brandon, Capital 7,000
Ryan, Capital 7,000
a. If the Other Assets are sold for $10,000, how much will each partner
receive before paying liabilities and distributing the remaining
assets?
b. If the Other Assets are sold for $8,000, how much will each partner
receive before paying liabilities and distributing remaining assets?
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