Asked by
Madalynn Strauss
on Nov 13, 2024
Verified
Partners Ken and Macki each have a $40,000 capital balance and share income and losses in the ratio of 3:2. Cash equals $20,000, noncash assets equal $120,000, and liabilities equal $60,000. If the noncash assets are sold for $60,000, and both partners agree to make up any capital deficits with personal cash contributions, Partner Macki will eventually receive cash of
A) $0
B) $4,000
C) $16,000
D) $24,000
Capital Deficits
Refers to a situation where a company's liabilities exceed its assets, indicating financial weakness or distress.
Noncash Assets
Assets that cannot be easily converted into cash, such as property, plant, and equipment.
Capital Balance
The amount of money that stakeholders have invested in a company minus any distributions to those stakeholders.
- Understand the process of liquidating partnerships, encompassing the distribution of assets and the settlement of liabilities.
- Comprehend the influence of partnership agreements and alterations in partnership structure on capital and cash distributions.
Verified Answer
FC
Learning Objectives
- Understand the process of liquidating partnerships, encompassing the distribution of assets and the settlement of liabilities.
- Comprehend the influence of partnership agreements and alterations in partnership structure on capital and cash distributions.