Inventory is sold for $276,000 and the partners have no assets other than those invested in the

partnership.

$

$

$

$

$

$

$

$

$

$

Step 1) Determination of gain (loss)

Proceeds from the sale of inventory

276,000

Inventory Cost

540,600

Loss on sale

(264,600)

Step 2) Allocation of the gain (loss) to the partners and distribution of deficit(s)

KENDRA

COGLEY

MEI

Total

Initial capital balances

75,800

170,550

132,650

379,000

Allocation of gains (losses)

3 / 6

(132,300)

2 / 6

(88,200)

1 / 6

(44,100)

(264,600)

Capital balances after gains (losses)

(56,500)

82,350

88,550

114,400

Allocation of deficit balance

56,500

2 / 3

(37,667)

1 / 3

(18,833)

0

Capital balances after deficit allocation

0

44,683

69,717

114,400

I need help trying to figure out how they figured the allocation of deficit for Cogly and Mei. Please and thank you