Sand, Mell, and Rand are partners who share incomes and losses in a 1:4:5 ratio.

Question

Sand, Mell, and Rand are partners who share incomes and losses in a 1:4:5 ratio. After lengthy disagreements among the partners and several unprofitable periods, the partners decided to liquidate the partnership. Before the liquidation, the partnership balance sheet showed Cash $10,000, total %u201Cother assets,%u201D $106,000; total liabilities, $88,000; Sand, Capital, $1,200; Mell, Capital, $11,700; and Rand, Capital, $15,100. The %u201Cother assets%u201D were sold for $ 85,000.

Determine the following:

Explanation / Answer

Assets=liabilities + equity. The $10,000 cash is an asset. The equity is the sum of the partners' capital (28000), minus the loss from selling the other assets (21000). After paying off the liabilities, there is $7000 cash left to divide among the partners.

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