Question

Wildhorse Company at December 31 has cash $22,400, noncash assets $108,000, liabilities $57,400, and the following capital balances: Floyd $44,800 and DeWitt $28,200. The firm is liquidated, and $118,000 in cash is received for the noncash assets. Floyd and DeWitt income ratios are 60% and 40%, respectively. Wildhorse Company now decides to liquidate the partnership.

Prepare the entries to record: (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

a.		The sale of noncash assets.
b.		The allocation of the gain or loss on realization to the partners.
c.		Payment of creditors.
d.		Distribution of cash to the partners.

	Account Titles and Explanation	Debit	Credit
a.
b.
c.
d.

Answer 1

Answer:

Journal entries:

S.No.	Account	Debit	Credit
a)	Cash	$118000
	Non cash assets		$108000
	Profit on sale		$10000
	(non cash assets sold)
b)	Profit on sale	$10000
	Capital –Floyd		$6000
	Capital – DeWitt		$4000
	(Profit on realization of non cash assets allocated to partners in the ratio of 60% and 40% respectively)
c)	Liabilities	$57400
	Cash		$57400
	(payment of creditors in Cash)
d)	Capital –Floyd ($44800 + 6000)	$50800
	Capital – DeWitt ($28200 + 4000)	$32200
	Cash (22400 +118000-57400)		$83000