Answer & Solution
Answer: Option
A
Solution:
In case of dissolution, the cash available for final distribution to the partners consists of two main components:
1. The sale of assets: This refers to the proceeds received from the sale of the partnership's assets, which will be converted into cash.
2. The beginning balance of cash: This is the amount of cash the partnership had before the sale of assets.
After payment of liabilities: Liabilities must be settled before distributing any remaining cash to partners. Once the liabilities are cleared, the remaining cash is available for distribution.
Option B: is incorrect because the balance of cash before the sale of assets does not account for the proper settlement of liabilities and does not specify the final amount available for distribution.
Option C: is incorrect because it subtracts the beginning balance of cash from the sale of assets, which is not a correct method of calculating cash available for distribution.
Option D: is incorrect because the total capital balances represent the partners' investments, not the cash available after asset sales and liability payments.
Conclusion: The correct answer is Option A, as it properly reflects the cash available for distribution after asset sales and liability payments.
