Question

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 $19,140, $4,700, and $21,860, respectively. Cash and noncash assets total $5,660 and $54,780, respectively. Amounts owed to creditors total $14,740. 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 $33,580, the partner with the capital deficiency pays the deficiency to the partnership, and the liabilities are paid.

	Required:
1.	Prepare a statement of partnership liquidation, indicating (a) the sale of assets and division of loss, (b) the payment of liabilities, (c) the receipt of the deficiency (from the appropriate partner), and (d) the distribution of cash. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers (balance deficiencies, payments, cash distributions, divisions of loss), use a minus sign. If there is no amount to be reported for items (a) - (d), the cell can be left blank. However, in the balance rows, a balance of zero MUST be indicated by entering "0".
2.	Assume the partner with the capital deficiency declares bankruptcy and is unable to pay the deficiency. Journalize the entries on Feb. 28 to (a) allocate the partner’s deficiency and (b) distribute the remaining cash. Refer to the Chart of Accounts for exact wording of account titles. 1. Prepare a statement of partnership liquidation, indicating (a) the sale of assets and division of loss, (b) the payment of liabilities, (c) the receipt of the deficiency (from the appropriate partner), and (d) the distribution of cash. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers (balance deficiencies, payments, cash distributions, divisions of loss), use a minus sign. If there is no amount to be reported for items (a) - (d), the cell can be left blank. However, in the balance rows, a balance of zero MUST be indicated by entering "0". Gerloff, Chu, and Jewett Statement of Partnership Liquidation 1 Cash + Noncash Assets = Liabilities + Capital, Gerloff (2/4) + Capital, Chu (1/4) + Capital, Jewett (1/4) 2 3 4 5 6 7 8 Balances 9 10 2. Assume the partner with the capital deficiency declares bankruptcy and is unable to pay the deficiency. Journalize the entries on Feb. 28 to (a) allocate the partner’s deficiency and (b) distribute the remaining cash. Refer to the Chart of Accounts for exact wording of account titles. PAGE 10 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 2 3 4 5 6

Answer 1

INSTALLMENT LIQUIDATION SCHEDULE Cash Non Cash Assets Liabilities Partner's Capital Balance William Gerloff, Capital Joshua Chu, Capita.rtney Jewett, Capital 14,740 54,780 (54,780) 19,140 (10,600) 8,540 4,700 (5,300) (600) 21,860 (5,300) 16,560 Particulars Profit & loss ratio Balances before realization (A) Sale of assets and division of Loss (B) Balances after realization (A + B) = (C) Payment of liabilities (D) Balances after payment of liabilities (C-D) Deficiency brought by partner Balance Cash distributed to partners Final balances 14,740 (14,740) 5,660 33,580 39,240 (14,740) 24,500 600 25,100 (25,100) 8,540 16,560 (600) 600 8,540 (8,540) 16,560 (16,560) Assume the partner with the capital deficiency declares bankruptcy and is unable to pay the deficiency. Journalize the entries on Feb. 28 to (a) allocate the partner's d 26 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF DEBIT CREDIT ASSETS LIABILITIES EQUITY 28-Feb William Gerloff, Capital (8540 - 600*2/3) Courtney Jewett, Capital (16560-600*1/3) Cash 8140 16,360 Equity (Decrease) Equity (Decrease) WWW 24,500 Asset(decrease)