Ariel, Mandy, and Tisha are partners in a tanning salon. The assets, liabilities, and capital balances as of July 1, 2010, are as follows:
- Assets: $480,000
- Liabilities: 160,000
- Ariel, Capital: 140,000
- Mandy Capital: 40,000
- Tisha, Capital: 140,000
Because competition is strong, business is declining, and the partnership has no cash, the partners have decided to sell the business. Ariel, Mandy, and Tisha share income and losses in a ratio of 3:1:1, respectively.The assets were sold for $260,000, and the liabilities were paid. Mandy has no other assets and will not be able to cover any deficits in her Capital account.
How will the ending cash balance be distributed to the partners?
For Ariel:I get 176,000 - taking the capital balance , Debit Liability of 96000 (160000X.6) and crediting the loss sale on assets of 132000 (220000X.6)For Mandy:I get 28000She has a debit balance?? so I debited the Liability of 32000 (1600000X.2) and credited 44000 (220,000X.2) For Tisha:I get 152000Debit 32000 and credit 44000 like I did for Mmandy All of my answers were wrong and I do not know how to solve it Was I suppose to take the partners with credit balance and based on their income/liability ratio divide Mandy liabilities to them?