Question

PR 12-5A Statement of partnership liquidation OBJ. 4 After the accounts are closed on February 3, prior to liquidating the partnership, the capital accounts of William Gerloff, Joshua Chu, and Courtney Jewett are $19,300, $4,500, and $22,300, respectively. Cash and noncash assets total $5,200 and $55,900, respectively. Amounts owed to creditors total $15,000. The partners share income and losses in the ratio of 2:1:1. Between February 3 and February 28, the noncash assets are sold for $34,300, the partner with the capital deficiency pays the deficiency to the partnership, and the liabilities are paid.

Answer 1

Q.1 : Statement of Partnership Liquidation

Particulars	Cash	Non-cash Assets	Liabilities	William Jerloff	Joshua Chu	Courtney Jewett
Balances	5,200	55,900	(15,000)	19,300	4,500	22,300
Sale of Assets & Division of Losses	34,300	(55,900)		(10,800)	(5,400)	(5,400)
Payment of Liabilities	(15,000)		15,000
Balances after payment of liabilites	24,500	-	-	8,500	(900)	16,900
Receipt of Deficiency	900				900
Balance after deficiency	25,400			8,500		16,900
Less : Cash Distribution to partner	(25,400)			(8,500)		(16,900)
Final Balances	-	-	-	-	-	-

Q.2 : Distribution of partner deficiency :

Particulars	Cash	Non-cash Assets	Liabilities	William Jerloff	Joshua Chu	Courtney Jewett
Balances	5,200	55,900	(15,000)	19,300	4,500	22,300
Sale of Assets & Division of Losses	34,300	(55,900)		(10,800)	(5,400)	(5,400)
Payment of Liabilities	(15,000)		15,000
Balances after payment of liabilites	24,500	-	-	8,500	(900)	16,900
Receipt of Deficiency	900				900
Balance after deficiency	25,400			8,500		16,900
Less : Cash Distribution to partner	(25,400)			(8,500)		(16,900)
Final Balances	-	-	-	-	-	-

Journal Entry
Willing Jerloff Capital A/c Dr	301
Courtney Jewett Capital A/c Dr	599
To Joshua Chu Capital A/c Credit		900
(The deficiency of Joshua distributed between two partner in capital balance ration before dissolution as per principle of Garnar Vs Murray)
Willing Jerloff Capital A/c Dr	8,199
Courtney Jewett Capital A/c Dr	16,301
To Cash		24,500
(Distribution of cash on dissolution of firm)