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

question 1

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.
• B) The first available $20,000 would go to Dancey.
• C) The first available $8,000 would go to Jahn.
• D) The first available $8,000 would go to Newman.
• E) The first available $4,000 would go to Jahn.

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Definitions:

Administrative Expense Budget

A projection of the costs associated with the general administration and management of a business.

Variable Cost

Costs that change in proportion to the level of production activity or business operations.

Monthly Fixed Cost

Regular, consistent costs that do not vary with production volume or business activity level, calculated on a monthly basis.

Budgeted Sales

The projected amount of sales revenue that a company plans to achieve in a specific period, based on market analysis and company goals.