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7 October, 06:01

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 had been paid and the noncash assets sold, Creighton had a deficit of $8,000. For what amount were the noncash assets sold?

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  1. 7 October, 06:13
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    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
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