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Minden, Mel, and Montana decide to liquidate their partnership. All assets are sold, and the liabilities are paid. Following these transactions, the capital balances and profit and loss percentages are as follows: Minden, $27,000 and 30%; Mel, $(12,000) and 40%; Montana, $43,000 and 30%. Mel is unable to contribute any assets to reduce the deficiency. How much cash will Montana receive as a result of the partnership liquidation

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letmeanswer

Answer:

The amount of cash that will be received by Montana is $37000.

Explanation:  

                                                 Minden           Mel       Montana

Profit sharing ratio                                 30%             40%            30%

Balances                                                 27000       -12000    43000

Deficiency distrubuted                           -6000      12000    -6000

Cash received by partners                    21000           0            37000    

Minden and Montana have to contribute in their

profit sharing ratio (30% and 30%), i.e., equally.

Therefore, the amount of cash that will be received by Montana is $37000.

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