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18 June, 07:03

Estimated expenses of liquidation were $10,000. Henry, Isaac, and Jacobs shared profits and losses in a ratio of 2:4:4. Before liquidating any assets, the partners determined the amount of safe cash and distributed it. The noncash assets were then sold for $120,000, and the liquidation expenses of $10,000 were paid. How much of the $120,000 would be distributed to Henry?

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  1. 18 June, 07:07
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    Solution and Explanation:

    The total amount of cash available for safe payments would be $25,000 (90,000 - 60,000 - 5,000). This amount will be distributed between Henry and Jacobs in the ratio of 6:4 meaning that $15,000 (25,000*60%) will be given to Henry and $10,000 (25,000*40%) will be given to Jacobs.

    The value of $120,000 will be distributed to the partners as follows:

    Henry Issac Jacobs

    Equity 80,000 110,000 140,000

    Less Loss on Assets 36,000 72,000 72,000

    Liquidation Expenses 1,000 2,000 2,000

    Balances 43,000 36,000 66,000

    Less Distribution

    of Safe Payments to Partners 15,000 0 10,000

    Net Balances $28,000 $36,000 $56,000
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