Bauer and Flynn share profits and loses in the ratio of 60/40. The after-closing

Question

Bauer and Flynn share profits and loses in the ratio of 60/40. The after-closing trial balance of their partnership justprior to liquidation showed: Cash: $5,000 Other assets: $80,000 Liabilities: $ 60,000 Bauer,Capital: $20,000 Flynn,Capital: $5,000
Assuming the partnership is liquidated on an installment basisand Other Assets with ahbook value of $50,000 are sold for $70,000,which one of the following amounts may be paid to Bauer at thattime?
A) $32,000 B) $20,000 C) $15,000 D) $12,500       Thanx The after-closing trial balance of their partnership justprior to liquidation showed: Cash: $5,000 Other assets: $80,000 Liabilities: $ 60,000 Bauer,Capital: $20,000 Flynn,Capital: $5,000
Assuming the partnership is liquidated on an installment basisand Other Assets with ahbook value of $50,000 are sold for $70,000,which one of the following amounts may be paid to Bauer at thattime?
A) $32,000 B) $20,000 C) $15,000 D) $12,500       Thanx

Explanation / Answer

Gain on other assets is $20,000 (Book value $50,000 Fair value$70,000) distributed among partners in 3:2 ratio. Baucer get his capital amount $20,000 plus gain amount $12,000($20,000 X 3/5) = $32,000 Answer is (A). $32,000

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