Hanson, James, and Smith, a Partnership, Is in the Process

Hanson, James, and Smith, a partnership, is in the process of liquidating. The partners have the following capital account balances; $48,000, $48,000, and ($18,000) respectively. The partners share all profits and losses 16%, 48%, and 36%, respectively. Smith has indicated that the ($18,000) deficit will be covered with a forthcoming contribution. The remaining partners have requested an immediate distribution of $40,000 in cash that is available. How should this cash be distributed?

A) Hanson $10,000; James $30,000.
B) Hanson $34,000; James $6,000.
C) Hanson $22,308; James $17,692.
D) Hanson $28,594; James $11,406.
E) Hanson $25,000; James $15,000.

Correct Answer:

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