Ryan and Peter share profits in the ratio 3:2. They have decided to liquidate the partnership. The furniture and the equipment were sold at a cumulative loss of $4000. The accounts receivable were collected in full and the other assets were written off as worthless. The accounts payable and other liabilities were paid off at book value. The firm's accountant distributed the remaining cash between Ryan and Peter equally. However, Peter initiated a lawsuit claiming that his share was greater than Ryan's. How much should Peter have received?
The balance sheet of Ryan and Peter's partnership as of December 31, 2018, is given below.
A) $20,500
B) $19,200
C) $21,800
D) $23,200
C) $21,800
The partners divide the remaining cash according to their capital balances. As a result,
Peter should receive $21,800 cash and Ryan should receive $19,200 cash.
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