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

question 13

Multiple Choice

Harding,Jones,and Sandy is in the process of liquidating and the partners have the following capital balances;20,000,22,000,and (10,000) respectively.The partners share all profits and losses 50%,35%,and 15%,respectively.Sandy has indicated that the (10,000) deficit will be covered with a forthcoming contribution.The remaining partners have requested to receive $18,382 in cash that is available.How should this cash be distributed?

• A)Harding $7,500;Jones $18,882.
• B)Harding $10,813;Jones $7,569.
• C)Harding $8,000;Jones $18,382.
• D)Harding $9,000;Jones $17,382.
• E)Harding $7,000;Jones $19,382.

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Definitions:

Common Stock

Equity ownership in a corporation, granting shareholders voting rights and a share in the company's profits through dividends.

Fair Value

The amount receivable for an asset sale or payable to undertake a liability in a transaction structured among market actors at the point of evaluation.

Par Value

The face value of a bond or stock as stated by the issuing company.

Consolidated Inventories

Inventories of a consolidated entity that are reported as a combined total from all subsidiaries and the parent company.