Harding, Jones, and Sandy Is in the Process of Liquidating

question 70

Multiple Choice

Harding, Jones, and Sandy is in the process of liquidating and the partners have the following capital balances; $24,000, $24,000, and ($9,000) respectively. The partners share all profits and losses 16%, 48%, and 36%, respectively. Sandy has indicated that the ($9,000) deficit will be covered with a forthcoming contribution. The remaining partners have requested to immediately receive $20,000 in cash that is available. How should this cash be distributed?

• A) Harding $5,000; Jones $15,000.
• B) Harding $17,000; Jones $3,000.
• C) Harding $11,154; Jones $8,846.
• D) Harding $14,297; Jones $5,703.
• E) Harding $12,500; Jones $7,500.

---

Definitions:

Net Operating Income

A company's total earnings from its operations, excluding taxes and other non-operational expenses, indicating the profitability of core business activities.

Traceable Fixed Expenses

Fixed costs that can be directly associated with a specific product, department, or segment of a business.

Common Fixed Expenses

Recurring expenses that do not vary with the level of production or sales, shared by multiple departments or products.

Promotional Campaign

A series of marketing efforts intended to increase awareness or sales of a product or service.