Alpha and beta are partners who share income in the ratio 1:2 and have capital balances of $40,000 and $70,000 at the time they decide to terminate teh partnership. after all non cash assets are sold and all liabilities are paid, there is a cash balance of $50,000. what amount of loss on realization should be allocated to alpha?

a. 60000
b. 20000
c. 30000
d. 50000

The amount of loss on realization should be allocated to alpha is $30000. The right answer is C.

Explanation:

In order to calculate what amount of loss on realization should be allocated to alpha first we have to calcuate the Excess amount invested by alpha.

Excess amount invested by alpha = $40,000-$35,000 = $5,000

Then we have to calculate the Amount available for distribution after reducing amount= $50,000-$5,000

                          = $45,000

The Share to alpha then is $45,000×1÷3 = $15,000

Therefore, Loss on realization: will be= $45,000-$15,000

                                                              = $30,000