Allen, Branden & Caylin Are in the Process of Liquidating

question 49

Multiple Choice

Allen, Branden & Caylin are in the process of liquidating their partnership. They have the following capital balances and profit and loss percentages: The partnership balance sheet shows cash of $5,000, non-cash assets of $14,000, and no liabilities. Assuming no liquidation expenses, what safe payment could be made?

• A)$5,000 split between Branden & Caylin by a ratio of 5/8 and 3/8, respectively.
• B)$5,000 to Branden only
• C)$1,000 to Allen, $2,500 to Branden, and $1,500 to Caylin
• D)$18,000 to Branden only

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Definitions:

Prime Costs

The sum of direct materials cost and direct labor cost, representing the primary costs involved in producing a product.

Finished Goods Inventory

The stock of completed products ready for sale but not yet sold, representing a current asset on the balance sheet.

Manufacturer

A company or individual that creates goods using raw materials and components through various processes, labor, and machinery.

Work in Process

Inventory that includes materials that are in the process of being manufactured but are not yet completed products.