A Local Partnership Was Considering the Possibility of Liquidation Since

question 47

Multiple Choice

A local partnership was considering the possibility of liquidation since one of the partners (Ding) was personally insolvent. Capital balances at that time were as follows. Profits and losses were divided on a 4:2:2:2 basis, respectively. $$\begin{array} { l r } \text { Ding, capital } & \$ 60,000 \\\text { Laurel, capital } & 67,000 \\\text { Ezzard, capital } & 17,000 \\\text { Tillman, capital } & 96,000\end{array}$$ Creditors of partner Ding filed a $25,000 claim against the partnership's assets. At that time, the partnership held noncash assets reported at $360,000 and liabilities of $120,000. There was no cash on hand at the time. If the assets could be sold for $228,000, what is the minimum amount that Ding's creditors would have received?

• A)$36,000.
• B)$0.
• C)$2,500.
• D)$38,720.
• E)$67,250.

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Definitions:

Total Variable Cost

The total of expenses that vary directly with the level of production, such as raw materials and direct labor.

Marginal Product

The additional output resulting from the use of one more unit of a production input, keeping other inputs constant.

AVC

Average Variable Cost, which is the total variable costs divided by the quantity of output produced.

ATC

A restated definition for Average Total Cost; it implies the cost per unit produced when both fixed and variable costs are accounted for across all levels of output.