The Abrams, Bartle, and Creighton partnership began the process of liquidation w
ID: 2485833 • Letter: T
Question
The Abrams, Bartle, and Creighton partnership began the process of liquidation with the following balance sheet: Cash $16,000 Liabilities $150,000 Non Cash items 434,000 Abrams, Capital 80,000 Bartle, Capital 90,000 Creighton, Capital 130,000 Total $450,000 Total: $450,000 Abrams, Bartle, and Creighton share profits and losses in a ratio of 3:2:5. Liquidation expenses are expected to be $12,000. If the noncash assets were sold for $234,000, what amount of the loss would have been allocated to Bartle? a) $43,200 b) $46,800 c) $40,000-correct answer d) $42,400 e) $43,100
Why not add the $12000 dollars expense into the total loss?
If $12000 are the loss, the answer should be D. Could you please explain it? Thank you!
Explanation / Answer
The liquidation expense will not be considered when allocation loss to individual person. Liquidation expense are considered and these expenses are allocated to the partners' capital accounts in their profit and loss ratio.
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