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Hello students, here is a question.
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On jan 1, 2011, a and b decided to liquidate their partnership.
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As the state, the capital balance were $400 ,000 and $800 ,000 respectively.
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The partner shared the profit and loss on 60 -40 ratio before liquidation.
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The partnership has $80 ,000 cash and $120 ,000 of liability.
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The partnership incurred loss of $480 ,000 on sale of non -cash asset, a solvent but b is insolvent.
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How much was the net proceed from the sale of non -cash asset? so, let us start solving this problem.
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So, as in the question, we have a capital of a and b company.
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So, a and b company's capital are $400 ,000 plus $800 ,000 which gives us $1 ,200 ,000...