The following condensed balance sheet is for the partnership of Miller, Tyson, a

Question

The following condensed balance sheet is for the partnership of Miller, Tyson, and Watson, who share profits and losses in the ratio of 6:2:2, respectively Cash Other assets $ 50,0 Liabilities $42,000 69,000 69,000 20,000 $ 200,000 150,000 Miller, capital Tyson, capital Watson, capital Total assets $ 200,000 Total liabilities and capital For how much money must the other assets be sold so that each partner receives some amount of cash in a liquidation? Other assets must be sold for an amount over

Explanation / Answer

Loss required to eliminate capital balances=Capital balance/Profit sharing ratio Miller 69000/0.60=115000 Tyson 69000/0.20=345000 Watson 20000/0.20=100000 Minimum loss=100000. Other assets=150000 It must be sold for an amount over 50000(150000-100000)

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