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?

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