The Partnership of Able, Bower, and Cramer Was Liquidated Required:
Prepare a Worksheet to Liquidate the Partnership

question 6

Essay

The partnership of Able, Bower, and Cramer was liquidated. The partners have shared profits and losses in the ratio of 2:4:4. Prior to liquidation, their capital balances were the following*:
* Deficit shown in parentheses
Cash totaled $20,000, with liabilities amounting to $30,000. A review of the individual partners' personal financial status reveals the following:
$\begin{array}{lrr} & \text { Assets } & \text { Liabilities } \\\text { Able } & \$ 5,000 & \$ 20,000 \\\text { Baker } & 6,000 & 4,000 \\\text { Cramer } & 30,000 & 20,000\end{array}$ Required:
Prepare a worksheet to liquidate the partnership.

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Definitions:

General Equilibrium

A state in which all parts of the economy (supply, demand, prices) are in balance and all markets are at equilibrium.

Market Equilibrium

A situation in which market supply and demand balance each other, and as a result, prices become stable.

Pareto Optimality

A state of allocation of resources in which it is impossible to make any one individual better off without making at least one individual worse off.

Partial Equilibrium

An analysis in economics focusing on the equilibrium of a specific sector or market without considering the whole economy.