Question

The partnership of Brandon and Ryan is being liquidated. All gains and losses are shared in a 3:1 ratio, respectively. Before liquidation, their balance sheet balances are as follows:

Answer 1

The partnership of Brandon and Ryan is being liquidated. All gains and losses are shared in a 3:1 ratio, respectively. Before liquidation, their balance sheet balances are as follows:

Cash $10,000

Other Assets 8,000

Liabilities 4,000

Brandon, Capital 7,000

Ryan, Capital 7,000

a. If the Other Assets are sold for $10,000, how much will each partner receive before paying liabilities and distributing the remaining assets?

b. If the Other Assets are sold for $8,000, how much will each partner receive before paying liabilities and distributing remaining assets?

Answer:

a; Brandon will receive $1500

    Ryan will receive $500

Explanation:

The Gain from sales of other assets of $2000 will be shared in the agreed ration 3/4 for Brandon and 1/4 for Ryan.

After which the liabilities will be settled and the balance cash shared in the ration of the Partners capital.

Answer:

b; Brandon will receive $0

    Ryan will receive $0

Explanation:

No gains from the sales of other assets which means nothing to receive.

Liabilities will  be settled and the remaining cash distributed in the ration of the partner's capital contributions

Answer 2

The answers are the following:
a. 
Brandon:
$7,000 + [($10,000/4)×3¿= $8,500
Ryan:
$7,000 + [($10,000/4)×1¿= $7,500

b.
Brandon $7,000
Ryan $7,000