Question

P12-6A Liquidation 1, inventory sold for $600,000 5070 339. 79. Kendra Cogley Mei Cash Inventory A/P Capital Beginning $ 180,800 $ 537,200 $ 245,500 $ 93,000 $ 212,500 $ 167,000 balances Sale of inventory Gain/Loss allocation Capital deficit(s) Payment of liabilities at BV Totals Cash distributed Account? Liquidation 2, inventory sold for $500,000 501 339 79 Kendra Cogley Mei Cash Inventory A/P Capital Capital Capital Beginning $ 180,800 $ 537,200 $ 245,500 $ 93,000 $ 212,500 $ 167,000 balances Sale of equipment Gain/Loss allocation Capital deficit(s) Payment of liabilities at BV Totals Cash distributed

liquidation 1 and 2 please

Answer 1

In the Question we assumed that,

1. Need to Liquidate Balance sheet and distribute the surplus of deficit to capital account

2. No Tax impact consider due to lack of information

Liquidation 1,

Inventory sold by $6,00,000 with profit of $ 62800/-

				50%	33%	17%
Particulars	Cash	Inventory	A/P	Kendra Capital	Cogley Capital	Mei Capital	Profit of sales of assets		Dr	Cr
Beginning Balance	1,80,800	5,37,200	2,45,500	93,000	2,12,500	1,67,000			7,18,000	7,18,000
Sale of inventory	6,00,000	-5,37,200					62,800
Gain/Loss Allocation				31,400	20,724	10,676
Capital Deficit(s)									-	-
Payment of Liability at BV	-		-
Total	7,80,800	-	2,45,500	1,24,400	2,33,224	1,77,676			7,80,800	7,80,800
Cash Distributed				1,24,400	2,33,224	1,77,676

Liquidation 2,

Inventory sold $5,00,000 with loss of $ 37,200

				50%	33%	17%
Particulars	Cash	Inventory	A/P	Kendra Capital	Cogley Capital	Mei Capital	Profit of sales of assets		Dr	Cr
Beginning Balance	1,80,800	5,37,200	2,45,500	93,000	2,12,500	1,67,000			7,18,000	7,18,000
Sale of inventory	5,00,000	-5,37,200					-37,200
Gain/Loss Allocation				-18,600	-12,276	-6,324
Capital Deficit(s)									-	-
Payment of Liability at BV	-		-
Total	6,80,800	-	2,45,500	74,400	2,00,224	1,60,676			6,80,800	6,80,800
Cash Distributed				74,400	2,00,224	1,60,676

There is no deficit in the both working.