March, April, and May have been in partnership for a number of years. The partners allocate all profits and losses on a 4:2:2 basis, respectively. Recently, each partner has become personally insolvent and, thus, the partners have decided to liquidate the business in hopes of remedying their personal financial problems. As of September 1, the partnership’s balance sheet is as follows:
Cash Ș 35,000 Liabilities $ 131,000
Accounts receivable 132,000 March, capital 60,000
Inventory 122,000 April, capital 99,000
Land, building, and equipment (net) 71,000 May, capital 70,000
Total assets $ 360,000 Total liabilities and capital $ 360,000
Prepare journal entries for the following transactions: (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
a. Sold all inventory for $80,000 cash.
b. Paid $14,700 in liquidation expenses.
c. Paid $64,000 of the partnership’s liabilities.
d. Collected $84,000 of the accounts receivable.
e. Distributed safe cash balances; the partners anticipate no further liquidation expenses.
f. Sold remaining accounts receivable for 35 percent of face value.
g. Sold land, building, and equipment for $41,000.
h. Paid all remaining liabilities of the partnership.
i. Distributed cash held by the business to the partners.
A similar method as the previous commenter, but some answers were a little wrong, so here's the correct version.
> Your method is good but some answers are incorrect. Here is the right solution. -- Cheers
a) Cash $80,000
March, Capital (4/8 of loss) $21,000
April, Capital (2/8) $10,500
May, Capital (2/8) $10,500
Inventory $122,000
b) March, Capital $7,350
April, Capital $3,675
May, Capital $3,675
Cash $14,700
c) Liabilities $64,000
Cash $64,000
d) Cash $84,000
A/R $84,000
e) April, Capital $41,150
May, Capital $12,150
Cash $53,300
f) Cash $16,800
March, Capital $15,600
April, Capital $7,800
May, Capital $7,800
A/R $48,000
g) Cash $41,000
March, Capital $15,000
April, Capital $7,500
May, Capital $7,500
Land, Building and Equipment $71,000
h) Liabilities $67,000
Cash $67,000
i) March, Capital $1,050
April, Capital $28,375
May, Capital $28,375
Cash $57,800
Jack Who Sun, Aug 8, 2021 11:37 AM
March, April, and May have been in partnership for a number of years.
> How did you get part i?
Checking i answers and they do not work.
Jack Who Sun, Aug 8, 2021 10:39 AM