Gonda, Herron, and Morse Is Considering Possible Liquidation Because Partner

question 1

Multiple Choice

Gonda, Herron, and Morse is considering possible liquidation because partner Morse is personally insolvent. The partners have the following capital balances: $60,000, $70,000, and $40,000, respectively, and share profits and losses 30%, 45%, and 25%, respectively. The partnership has $200,000 in noncash assets that can be sold for $150,000. The partnership has $10,000 cash on hand, and $40,000 in liabilities. What is the minimum that partner Morse's creditors would receive if they have filed a claim for $50,000?

• A) $0.
• B) $27,500.
• C) $45,000.
• D) $47,500.
• E) $50,000.

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Definitions:

Raw Material Purchases

The total cost of materials bought that are intended to be used in the production of goods.

Cost of Goods Sold

The immediate expenses linked to the manufacturing of products that a company sells.

Sales Forecast

An estimate of the quantity of goods or services that an organization expects to sell in a particular period.

Raw Material Purchases Cost

The total amount spent on buying raw materials necessary for production.