A local partnership has assets of cash of $130,000 and land recorded at $700,000

Question

A local partnership has assets of cash of $130,000 and land recorded at $700,000. All liabilities have been paid and the partners are all personally insolvent. The partners' capital accounts are as follows Roberts, $500,000, Ferry, $300,000 and Mones, $30,000. The partners share profits and losses 5:3:2. If the land is sold for $450,000, how much cash will Roberts receive in the final settlement?

A. $0. B. $30,000. C. $217,500. D. $362,500. E. $502,500.

My solution: R = $500,000; F = $300,000; M = $30,000 with Losses Shared 5:3:2 First eliminate M Balance of $30,000 in $250,000 Loss Losses now shared 5/8 & 3/8 R = $500,000 - ($220,000 × 5/8) $137,500 = $362,500 F = $300,000 - ($220,000 × 3/8) $82,500 = $217,500

I have the solution while I still want to know other way to solve this problem. Thank you very much!!

Explanation / Answer

Loss on sale of land= $700000-$450000= $250000

Mone's share of realisation loss= $250000*2/10= $50,000 Mone's capital balance= $30,000

Here Mone's debit balance is more than credit balance by 20,000$

So, We will have losses ashred between Roberts and Ferry.

Removing Ferry's balance of $30,000 from $250,000 = $22,000. And now share the loss between Robert and Ferry in 5:3

Robert= $500,000-($220,000*5/8)$137,500 = $362,500

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