Dancey, Reese, Newman, and Jahn Were Partners Who Shared Profits

question 65

Multiple Choice

Dancey, Reese, Newman, and Jahn were partners who shared profits and losses on a 4:2:2:2 basis, respectively. They were beginning to liquidate their business. At the start of the process, capital balances were as follows: $$\begin{array} { l r } \text { Dancey, capital } & \$ 72,000 \\\text { Reese, capital } & 32,000 \\\text { Newman, capital } & 52,000 \\\text { Jahn, capital } & 24,000\end{array}$$ Which one of the following statements is true for a predistribution plan?

• A)The first available $16,000 would go to Newman. The next $12,000 would go $8,000 to Dancey and $4,000 to Newman. The following $32,000 would be shared by Dancey, Reese, and Newman. The total distribution would be $60,000 before all four partners share any further payments equally.
• B)The first available $16,000 would go to Newman. The next $12,000 would go $8,000 to Dancey and $4,000 to Newman. The following $32,000 would be shared by Dancey, Reese, and Newman. The total distribution would be $60,000 before all four partners share any further payments in their profit and loss sharing ratios.
• C)The first $20,000 would go to Newman. The next $8,000 would go to Dancey. The next $12,000 would be shared by Dancey, Reese, and Newman. The total distribution would be $40,000 before all four partners share any further payments equally.
• D)The first available $8,000 would go to Newman. The next $4,000 would be split equally between Dancey and Newman. The following $12,000 would be shared by Dancey, Reese, and Newman. The total distribution would be $24,000 before all four partners share any further payments equally.
• E)The first available $8,000 would go to Newman. The next $4,000 would be split equally between Dancey and Newman. The following $12,000 would be shared by Dancey, Reese, and Newman. The total distribution would be $24,000 before all four partners share any further payments in their profit and loss sharing ratios.

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Definitions:

Replenishment Cycle

The process of restocking products or materials in a supply chain, from ordering to receipt and back to order again.

Lead Time

Lead time is the duration between the initiation and completion of a process, often used in reference to the time taken from ordering to receiving goods.

ROP

Refers to Reorder Point, a inventory management technique indicating the minimum level before a new order must be placed.

Continuous Review Policies

Inventory management strategies that monitor inventory levels continuously to decide when to reorder.