2418 152 PM CHAPTER 12 ACCOUNTING FOR PARTNERSHIPS AND LIMIT

/24/18, 152 PM CHAPTER 12 -ACCOUNTING FOR PARTNERSHIPS AND LIMITED LIABILITY COMPANIES Study 0 Progress O Previous 0 Page 10 of 13 ll10 Next Submit Quiz Minden, Mel, and Montana decide to liquidate their partnership. All assets are sold, and the liabilities are paid. Following these transactions, the capital balances and profit and loss percentages are as follows Minden, $27,000 and 30%; Mel, contribute any assets to reduce the deficiency. How much cash will Montana receive as a result of the partnership liquidation? $(12,000) and 40%; Montana, S43.000 and 30%, Mel is unable to a. $43,000 b. $21,000 c. $37.000 d. $31,000 Asp Take /2418, 1:47 PM CHAPTER 12-ACCOUNTING FOR PARTNERSHIPS AND LIMITED LIABILITY COMPANIES Study 0Progress0 Previous 0 Page 3 of 13 Next() Submit Quiz The articles of partnership for Pal-Trotter Partnership provide for a salary allowance of $5,000 per month for partner Trotter, with the balance of net income to be divided equally. If Trotter made an additional investment of $10,000 during the year and withdrew $4,000 per month, and net income for the year was $80,000, by what amount did Trotters capital increase during the year? a. $48,000 b. $10,000 C. $32,000 d. $60,000

Solution

Answer is C.

Working:

Answer ic C

	Minden	Mel	Montana
Profit sharing ratio	30%	40%	30%
Balances	27000	-12000	43000
Deficiency distrubited	-6000	12000	-6000
Cash received by partners	21000	0	37000
Minden and Montana hav to contribute in their
profit sharing ratio (30% and 30%), i.e., equally.