Alternative Profit and Loss-Sharing Ratios in a Partnership Liquidation
Nelson, Osman, Peters, and Quincy have decided to terminate their partnership because of recurrent arguments among the partners. The partnership’s balance sheet at the time they decide to wind up is as follows:
Cash | $ 17,000 | Accounts Payable | $ 12,000 |
Noncash Assets | 190,000 | Nelson, Capital | 15,000 |
|
| Osman, Capital | 75,000 |
|
| Peters, Capital | 75,000 |
|
| Quincy, Capital | 30,000 |
Total Assets | $207,000 | Total Liabilities and Equities | $207,000 |
During the winding up of the partnership, the other assets are sold for $100,000 and the accounts payable are paid. Osman and Peters are personally solvent, but Nelson and Quincy are personally insolvent.
Required
Determine the amount of cash each partner will receive from the final distributions of the partnership for each of the following independent cases of profit and loss ratios for Nelson, Osman, Peters, and Quincy.
a. The partners share profits and losses in the ratio of 3:3:2:2.
b. The partners share profits and losses in the ratio of 3:1:3:3.
c. The partners share profits and losses in the ratio of 3:1:2:4.
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