Reference no: EM133035990

Questions -

Q1. Mom, Bob and Gag are partners with capital balances of $320,000, $450,000 and $520,000 respectively with profit and loss sharing ratio of 2:3:5 respectively. The entity owes Bob $20,000. Upon liquidation, $390,000 is available for distribution to the partners. How much cash will Mom receive?

Q2. Bea, Wade, and Freya agree to sell construction tools for a period of one month. Bea agrees to construct a stand on the front of the lawn of Freya. Freya will be paid $2,500 for cleaning up the lawn after the one-month selling period. Bea, Wade, and Freya decide that net income, if any will be allocated first by the $2,500 payment to Freya and then by a 40% commission on individual sales. The balance will be distributed 75% to Bea and 25% to Wade. They agree that a cash box will complicate the matters and that all purchases and sales transactions will be out-of-pocket and the responsibility of the individual. Sales to Bea, Wade, and Freya are to be at cost, except that the ending inventory may be purchased at 50% of cost. All other sales are to be made at 100% mark-up on cost.

The activity of the joint operation are presented below:

a. Bea construct the stand on the front of the lawn at a cost of $10,000;

b. Bea pays for $100,000 for various construction tools. Freya pays $5,000 for permit to operate the concession or business;

c. Bea purchases additional construction tools for $150,000, using $50,000 contributed by Wade and $100,000 of personal money;

d. Sales for the period were as follows: Bea, $170,000; Wade, $260,000; and Freya, $60,000;

e. Freya pays $9,000 for office supplies and these are distributed equally between Bea, Wade, and Freya for their personal use at home. Freya agrees to pay $5,000 for the stand.

f. The balance of construction tools inventory was taken by Bea.

How much is the amount to be received (paid) by Bea during cash settlement?