sume that ABC partnership is being liquidated using an installment liquidation a

Question

sume that ABC partnership is being liquidated using an installment liquidation approach. Partners' capital balances were $100,000 for A, $150,000 for B, and $80,000 for C. Further, the three partners share profits and losses as follows: 20% for A, 40% for B, and 40% for C. which of the three partners is most likely to receive a cash distribution first, as determined by the schedule of safe payments? a. Partner C b. Partner A c. Partner B d. All partners should receive a cash distribution at the same time.

Explanation / Answer

Answer is b. Partner A. Explanation: A B C Capital 100000 150000 80000 Divide: Profit sharing ratio 1 2 2 (20:40:40 i.e. 1: 2 : 2) Capital contributed for one share 100000 75000 40,000 As the Partner A has highest contribution per share, he will be given the amount first

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