Carney, Pierce, Menton, and Hoehn are partners who share profits and losses on a
ID: 2391180 • Letter: C
Question
Carney, Pierce, Menton, and Hoehn are partners who share profits and losses on a 4:3:2:1 basis, respectively. They are beginning to liquidate the business. At the start of this process, capital balances are
Which of the following statements is true?
Multiple Choice
a. Carney will collect a portion of any available cash before Hoehn receives money.
b. Carney will be the last partner to receive any available cash.
c. The first available $3,800 will go to Hoehn.
d. The first available $5,400 will go to Menton.
Carney, capital $ 66,000 Pierce, capital 28,800 Menton, capital 49,000 Hoehn, capital 21,800Explanation / Answer
Answer is d. The first availabel wil go to Menton $ 5400 Explanation: Carney Perce Menton Hoehn Capital 66000 28800 49000 21800 Profit or loss sharing ratio 4 3 2 1 Capital for one share 16500 9600 24500 21800 Capital which shoud have been 38400 28800 19200 9600 (Take perce as base) Excess capital 27600 0 29800 12200 Carney Menton Hoehn Capital 66000 49000 21800 Profit or loss ratio 4 2 1 Capiital for one share 16500 24500 21800 Capital which should be 66000 33000 16500 (Carney as base) Excess capital 0 16000 5300 Menton Hoehn Capital 49000 21800 Profit or loss ratio 2 1 Capiital for one share 24500 21800 Capital which should be 43600 21800 (Hoehn as base) Excess capital 5400 0 Hence, Menton must be paid first $ 5400