Answer:
Adam = $41,000
, Ben = $31,000
, Erica =$20,000
Profit and loss sharing Ratio respectively =1:1:2
<u>Requirement 1</u>
Cash available $72,000
Add: Cash received from sale of <u>$50,000</u>
non-cash assets
$122,000
Less: Cash paid against account <u>$20,000 </u>
receivables
Cash to be distributed <u>$102,000</u>
<u />
<em><u>Distribution</u></em><em>
</em>
Adam= $102,000 * 1/4 = $25,500
Ben = $102,000 * 1/4 = $25,500
Erica = $102,000 * 2/4 = $51,000
<u>Requirement 2</u>
Cash available $72,000
Add: Cash received from sale of <u>$25,000</u>
non-cash assets
$97,000
Less: Cash paid against account <u>$20,000 </u>
receivables
Cash to be distributed <u>$77,000</u>
<u />
<em><u>Distribution</u></em><em>
</em>
Adam= $77,000 * 1/4 = $19,250
Ben = $77,000 * 1/4 = $19,250
Erica = $77,000 * 2/4 = $38,500