Question

9) 9) The partners of the Blue Tooth Partnership agree to liquidate. After all liabilities of $100,000 are paid, the capital account balances are: Wong, $80,000; Winslow, $70,000; and Peters, ($4,000). Peters agrees to pay $4,000 in cash to settle his deficiency. Prepare the journal entries required to end the partnership. 10) 10) The partners of the Blue Tooth Partnership agree to liquidate. After all liabilities of $100.000 are paid, the capital account balances are: Wong. $80,000; Winslow, $70,000; and Peters, ($4,000). Peters is unable to pay his capital deficiency. Assume the partners have no agreement for sharing profits and losses. Prepare the journal entries required to end the partnership.

Answer 1

9)

Account Titles and Explanation	Debit	Credit
Cash	4000
Peters, capital		4000
(To record cash brought in by Peter)
Wong, capital	80000
Winslow, capital	70000
Cash		150000
(To record distribution of cash)

10)

Account Titles and Explanation	Debit	Credit
Wong, capital	2000
Winslow, capital	2000
Peters, capital		4000
(To record deficit borne by other partners)
Wong, capital	78000
Winslow, capital	68000
Cash		146000
(To record distribution of cash)

In the absence of an agreement for sharing profits and losses, Peters' capital deficiency will be borne by Wong and Winslow equally.