The Partners' Profit and Loss Sharing Ratio Is 2:3:5, Respectively

question 51

Multiple Choice

The partners' profit and loss sharing ratio is 2:3:5, respectively.
-If the D, E, and F Partnership is liquidated by selling the equipment for $45,000 and creditors are paid in full, what is the amount of cash that can be safely distributed to each partner?

• A) D, $24,000; E, $16,000; F, $0
• B) D, $14,000; E, $21,000; F, $5,000
• C) D, $20,000; E, $25,000; F, $5,000
• D) D, $30,000; E, $25,000; F, $15,000

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Definitions:

Prices

Prices represent the amount of money expected, required, or given in payment for something.

Economic Profits

The surplus generated from business activities after subtracting both explicit and implicit costs, including opportunity costs.

ATC

Average Total Cost is the sum of all production expenses divided by the quantity of output produced, representing the per unit cost of production.

Barrier To Entry

Factors that prevent or hinder new competitors from easily entering an industry or area of business.