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NEW QUESTION: 1
Smith and James were partners in S and J Partnership. The partnership agreement stated that all profits
and losses were allocated 60 percent to Smith and 40 percent to James. The partners decided to
terminate and wind up the partnership. The following was the balance sheet for S and J on the day of the
windup:
Of the total accounts receivable, $10,000 was collected and the remainder was written off as bad debt. All
liabilities of S and J were paid by the partnership. The property and equipment are sold for $32,000.
Under the Uniform Partnership Act, what amount of cash was distributed to Smith?
A. $30,000
B. $34,800
C. $26,000
D. $25,200
Answer: D
Explanation:
Choice "a" is correct. Upon termination of the partnership creditors are paid first. After payment of
creditors, each partner is deemed to have an account that is charged or credited an amount equal to the
partner's contribution plus or minus the partner's share of any profits or losses. The agreement between
Smith and James was that profits and losses would be allocated 60% to Smith and 40% to James. The
partnership had $82,000 in assets ($40,000 in cash, $10,000 from accounts receivable, and $32,000 from
property and equipment). The partnership had $90,000 in liabilities and capital. Of the $82,000 in assets,
$ 24,000 is paid first to creditors. This leaves a balance of $58,000.
Smith contributed $30,000 in capital and James contributed $36,000 in capital. With $66,000 owed in
capital and only $58,000 available, there is a deficit of $8,000. By agreement, Smith is responsible for
6 0% of the $8,000 deficit or $4,800.
Smith would be credited an amount equal to his capital ($30,000) minus his share of the loss ($4,800) or
$ 25,200. Only choice "a" reflects this amount.
Choices "b", "c", and "d" are incorrect, per the above calculation.
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D. Modify the columns Source or Destination in Rule 4.
Answer: B
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B. The MPLS label is swapped by the ingress router.
C. The MPLS label is popped by the penultimate router.
D. The MPLS label is pushed by the ingress router.
Answer: C,D
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