Question

The Keller, Long, and Mason partnership had the following balance sheet just before entering liquidation:

Cash	$	115,000		Liabilities	$	45,000
Noncash assets		230,000		Keller, Capital		100,000
				Long, Capital		70,000
				Mason, Capital		130,000
Total	$	345,000		Total	$	345,000

Keller, Long, and Mason share profits and losses in a ratio of 2:4:4. Assuming noncash assets were sold for $70,000 and liquidation expenses in the amount of $18,500 were incurred, how much will each partner receive in the liquidation?

	Keller			Long			Mason
A)	$	14,000		$	28,000		$	28,000
B)	$	37,000		$	74,000		$	74,000
C)	$	63,833		$	0		$	57,667
D)	$	0		$	0		$	121,500
E)	$	57,833		$	12,000		$	51,667

Answer 1

Cash	Noncash Assets	Liabilities	Keller (2/10)	Long (4/10)	Mason (4/10)
Balances before realization	115000	230000	45000	100000	70000	130000
Sale of assets net of liquidation expenses and division of loss	51500	-230000	0	-35700	-71400	-71400
Balances after realization	166500	0	45000	64300	-1400	58600
Payment of liabilities	-45000	0	-45000	0	0	0
Balances after payment of liabilities	121500	0	0	64300	-1400	58600
Division of Long's deficiency	0	0	0	-467	1400	-933
Balances	121500	0	0	63833	0	57667
Cash distributed to partners	-121500	0	0	-63833	0	-57667
Option C $ 63,833, $0, $57,667 is correct