Ariel, Mandy, and Tisha are partners in a tanning salon. The assets, liabilities

Question

Ariel, Mandy, and Tisha are partners in a tanning salon. The assets, liabilities, and capital balances as of July 1, 2010, are as follows:
Assets $480,000
Liabilities 160,000
Ariel, Capital 140,000
Mandy, Capital 40,000
Tisha, Capital 140,000

Because competition is strong, business is declining, and the partnership has no cash, the partners have decided to sell the business. Ariel, Mandy, and Tisha share income and losses in a ratio of 3:1:1, respectively. The assets were sold for $260,000, and the liabilities were paid. Mandy has no other assets and will not be able to cover any deficits in her Capital account.

How will the ending cash balance be distributed to the partners? If an amount is zero, enter "0".

Explanation / Answer

Distribution of ending cash between partners
======================================
                                              Ariel         Mandy      Tisha
Capital balance                      140,000    40,000      140,000
Loss on sale of assets
==================
(480,000-260,000)x3/5         -132,000
(480,000-260,000)x1/5                         -44,000
(480,000-260,000)x3/5                                          -44,000
Capital balance after loss         8,000     -4,000       96,000
Mandy loss to be absorbed
by Ariel & Tisha (3:1)             -3,000      -4,000        -1,000
Cash to be paid                    5,000           0          95,000

Note : Available cash (260,000 - 160,000) = 100,000

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