Shrek, Donkey, and Fiona Are Partners in SDF and Share

question 5

Multiple Choice

Shrek, Donkey, and Fiona are partners in SDF and share profits and losses in the ratio of 5:3:2, respectively. The partnership has cash of $10,000 and noncash assets of $90,000 when they decide to liquidate. Liabilities at the time of liquidation are $40,000, including a note payable to Fiona of $5,000. The partner capital accounts are Shrek $40,000, Donkey $ 15,000 and Fiona $5,000. The non-cash assets of the partnership were sold for $26,000. The liabilities other than the note payable to Fiona are paid. Fiona is personally insolvent. Shrek and Donkey are not insolvent. Under the circumstances:

• A) Shrek will receive a distribution in liquidation of $8,000.
• B) Fiona will be required to contribute $2,800 to the partnership.
• C) Shrek will receive a distribution in liquidation of $6,250.
• D) Donkey will be required to contribute $4,200 to the partnership.

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Definitions:

Mental Elements

Fundamental components or aspects that make up the processes of the mind, such as thoughts, feelings, and attitudes.

Sentiments

Complex feelings that arise from attitudes, beliefs, and judgments, which influence how individuals perceive and interact with others.

Attitudes

A settled way of thinking or feeling about someone or something, typically reflected in a person's behavior.

Intelligence

Intelligence refers to the cognitive ability to learn from experience, solve problems, and use knowledge to adapt to new situations.