14.

Donkey desires to purchase a one-fourth capital and profit and loss interest in the partnership of Shrek, Fiona, and Muffin. The three partners agree to sell Donkey one-fourth of their respective capital and profit and loss interests in exchange for a total payment of $125,000. The payment is made directly to the individual partners. The capital accounts and the respective percentage interests in profits and losses immediately before the sale to Donkey follow:

	Capital Accounts	Percentage Interests in Profits and Losses
Shrek	$210,000	60%
Fiona	130,000	25
Muffin	60,000	15
Total	$400,000

All other assets and liabilities are fairly valued above. Immediately after Donkey's acquisition, what should be the capital balances of Shrek, Fiona, and Muffin, respectively?

A)

$157,500; $97,500; $45,000

B)

$195,000; $123,750; $56,250

C)

$222,500; $138,750; $63,750

D)

$260,000; $165,000; $75,000

15.

The partnership of Abel and Caine was formed on February 28, 2017. At that date the following assets were invested:

	Abel	Caine
Cash	$ 120,000	$200,000
Merchandise	-0-	320,000
Building	-0-	840,000
Furniture and equipment	200,000	-0-

The building is subject to a mortgage loan of $280,000, which is to be assumed by the partnership. The partnership agreement provides that Abel and Caine share profits or losses 30% and 70%, respectively. Caine's capital account at February 28, 2017, should be

A)

$1,080,000.

B)

$1,360,000.

C)

$1,176,000.

D)

$952,000.

16.	A, B, and C have capital balances of $80,000, $80,000, and $40,000, respectively. Profits are allocated 40% to A, 40% to B and 20% to C. The partners have decided to dissolve and liquidate the partnership. After paying all creditors the amount available for distribution is $20,000. A, and B are personally solvent. C is personally insolvent. Under the circumstances, A and B will each:
	A)	receive $10,000.
	B)	receive $9,000.
	C)	receive $8,000.
	D)	receive $6,000.