Partners David and Goliath have decided to liquidate their business. The following information is available:

Cash	$100,000
Inventory	$200,000
	$300,000
Accounts Payable	$80,000
David, Capital	$140,000
Goliath, Capital	$80,000
	$300,000

David and Goliath share profits and losses in a 3:1 ratio, respectively. During the first month of liquidation, half the inventory is sold for $70,000, and $50,000 of the accounts payable are paid. During the second month, the rest of the inventory is sold for $55,000, and the remaining accounts payable are paid. Cash is distributed at the end of each month, and the liquidation is completed at the end of the second month.

6.Refer to the information provided above. Using a safe payment schedule, how much cash will be distributed to David at the end of the first month?

$22,500

$42,500

$75,000

$117,500

7.Refer to the information provided above. Using a safe payment schedule, how much cash will be distributed to Goliath at the end of the first month?

$7,500

$25,000

$47,500

$72,500

8.Refer to the information provided above. How much cash will be distributed to David at the end of the second month?

$75,000

$60,000

$41,250

$33,750

9.Refer to the information provided above. How much cash will be distributed to Goliath at the end of the second month?

$11,250

$13,750

$20,000

$25,000

10.

Refer to the information provided above. Assume instead that the remaining inventory was sold for $20,000 in the second month. What payments will be made to David and Goliath at the end of the second month?

	David	Goliath
A.	$0	$0
B.	$10,000	$10,000
C.	$15,000	$5,000
D.	$20,000	$0

Option A

Option B

Option C

Option D