Gilligan, Skipper, and Professor Are Partners with a Profit and Loss

question 19

Multiple Choice

Gilligan, Skipper, and Professor are partners with a profit and loss ratio of 4:3:3.The partnership was liquidated and, prior to the liquidation process, the partnership balance sheet was as follows: \begin{array}{c} \text { GILLIIGAN, SKIPPER, AND PROFESSOR}\\ \text { Balance Sheet}\\ \text { January 1, 2014}\\\\\\begin{array}{lll} \text { Assets}\\ \text { Cash}&\$60,000\\ \text { Other assets}&540,000\\&\underline{\quad\quad}\\ \text { Total Assets}&\$600,000\end{array}\begin{array}{lll}\text {Liabilities and Equity}\\\text {Gilligan, Capital}&\$216,000\\\text {Skipper, Capital}&240,000\\\text {Professor, Capital}&144,000\\\text {Total Liabilities \& Equities}&\$600,000\end{array}\end{array}
After the partnership was liquidated and the cash was distributed, Skipper received $96,000 in cash in full settlement of his interest.
The liquidation loss must have been:

• A)$360,000
• B)$144,000
• C)$504,000
• D)$480,000

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Definitions:

Angel Investor

An affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity.

Equity

Ownership interest in a firm, represented by shares that entitle their holders to a share in the firm's profits and a say in its management.

Franchisor

A business entity that grants the right to operate a franchise under its brand name and system to a franchisee.

Learning Experience

The process of acquiring knowledge or skills through study, experience, or teaching, which can influence behavior or understanding.