Question

Alpha and Beta are partners who share income in the ratio of 1:2 and have capital balances of $42,600 and $88,200, respectively, at the time they decide to terminate the partnership. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $77,700. What amount of loss on realization should be allocated to Alpha

Answer 1

Answer:

The amount of loss to Alpha is $17700.

Explanation:

Given income sharing ratio = 1:2

The capital balance of Alpha = $42600

The capital balance of Beta = $88200

Total capital balance (Alpha + Beta) $= 42600 + 88200 = 130800$

The cash balance available = $77700

Loss = 130800 – 77700 = $ 53100

The share of loss allocated to Alpha:

$= 53100 \times \frac{1}{3} \\= 17700$

Therefore, the amount of loss to Alpha is $17700.