Duffie and Simpson Have Decided to Liquidate Their Partnership After

question 156

Multiple Choice

Duffie and Simpson have decided to liquidate their partnership after several years of losses. Their partnership agreement states that the partners share in income and losses equally. At the time of liquidation, the capital balances were $78,400 Duffie and $61,600 Simpson. The company has $14,000 cash on hand. Non-cash assets are liquidated for $120,000, with no resulting gain or loss. Liabilities of $76,000 are paid to creditors, with no gain or loss incurred. The amount to be distributed to Simpson upon liquidation is:

• A)$61,600
• B)$58,960
• C)$32,480
• D)$29,000
• E)$25,520

---

Definitions:

Par Value

Par value is the nominal or face value of a bond, share of stock, or coupon as stated by the issuer, which may differ significantly from its market value.

Debt Investments-HTM

Investments in debt securities that are held to maturity, meaning the investor plans to hold the securities until they are paid off at their maturity date.

Stock Investments

Securities representing equity or ownership interest in a corporation, allowing investors to gain dividends and potentially capital gains.

Fair Value

An estimate of the market value of an asset or liability, based on the price that two willing parties would agree to in an arm's length transaction.