In Liquidation, Balances Prior to the Distribution of Cash to the Partners

question 112

Multiple Choice

In liquidation, balances prior to the distribution of cash to the partners are: Cash $255,000; Presley, Capital $140,000; Laswell, Capital $130,000, and Hunter, Capital $15,000 deficiency. The income ratio is 6:2:2, respectively. How much cash should be distributed to Laswell if Hunter does not pay his deficiency?

• A) $122,500
• B) $126,250
• C) $118,750
• D) $130,000

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Definitions:

Nonprice Competition

Strategies companies use to differentiate their product or service based on features, service, quality, or brand image rather than price.

Economic Profits

The net amount remaining when all costs, both obvious and not, are subtracted from the total income.

Differentiated Products

are goods or services that are distinguishable from each other on the basis of quality, features, or branding, leading to non-price competition among firms.

Perfectly Elastic

A situation in economics where the quantity demanded or supplied changes by an infinite amount in response to any change in price, represented graphically as a horizontal line.