Ariel, Mandy, and Tisha are partners in a tanning salon. The assets, liabilities, and capital balances as

Question:

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 ......... 16,000

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 partners?

Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...