M5

3Partners Roger and Martin each have $3,000 capital balances and share income and losses in a 2:1 ratio for Roger and Martin, respectively. Cash equals $1,000, noncash assets total $10,000, and liabilities are $5,000. If all the noncash assets are sold for $4,000, Martin's capital account will:

		increase by $4,667.
		decrease by $2,000.
		decrease by $1,000.
		increase by $2,333.

5

Partners Eric and Jeremy each have $3,000 capital balances and share income and losses in a 2:1 ratio for Eric and Jeremy, respectively. Cash equals $1,000, noncash assets are $10,000, and liabilities are $5,000. If all the noncash assets are sold for $4,000, and each partner is personally insolvent, Jeremy eventually will receive cash of:

		$0.
		$1,000.
		$1,500.
		$2,000.

8

The sale of assets for liquidation purposes of a partnership is called:

		a sheriff's sale.
		dissolution.
		net liquidation.
		None of the above

9

The last entry to liquidate a partnership would probably include:

		debit to Capital (for each partner); credit to Cash.
		debit to Cash; debit or credit to Loss or Gain from Realization; credit to individual assets sold.
		debit to individual assets sold; credit to Cash.
		None of the above

Partners Ron and Sandra have $3,000 capital balances and share income and losses in a 2:1 ratio for Ron and Sandra, respectively. Cash equals $1,000, noncash assets are $10,000, and liabilities are $5,000. If all the noncash assets are sold for $5,500, and each partner agrees to make up any capital deficits with personal cash contributions, Sandra eventually will receive cash of:

		$0.
		$1,000.
		$1,500.
		$2,000