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

question 26

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.

---

Definitions:

Concise General Statement

A brief, comprehensive description that captures the essence or main points of a subject.

Proposed Rule

A regulation or policy put forward for consideration or adoption by a governmental entity or agency.

Administrative Agency

A government body responsible for the oversight and implementation of specific regulations and statutes within its area of authority.

Substantial Evidence Test

A legal principle that a decision must be supported by sufficient evidence that a reasonable person could accept as adequate to support a conclusion.