Question

Problem 2

A, B, C and D are winding down their partnership and have elected to sell off all assets and to distribute any available cash. If any partner has a negative capital account then they can only be responsible for repayment to the extent that they have personal assets. The balance sheet as of December 31, 2019 is as follows.

            Cash                                                    40,000

            Other Assets                                      410,000

                        Total Assets                           450.000

            Accounts Payable                              109,000

            A, Capital (30%)                                111,000

            B, Capital (10%)                                113,000

            C, Capital (40%)                                78,000

            D, Capital (10%)                                39,000

                  Total Liabilities& Capital          450,000

The personal assets and liabilities of each partner are as follows

                                                Personal Assets          Personal Liabilities      

A, Capital                                           176,000                        144,000

B, Capital                                           80,000                        102,000

C, Capital                                           217,000                        176,000

D, Capital                                           54,000                        77,000

1. The Partnership sold all of the assets for $180,000
2. All of the creditors were paid
3. Partners settled with partnership
4. Cash was distributed to partners

REQUIRED: Prepare entries to record above.

Answer 1

Answer:- Summarized the information and data given in the question; AB.CaDore winding *Prepaving entries to record above; Entries foo realisation Account details -Debit credit Cash 1, 80,000 Loss on realisation 2,30,000 other assets 42,10,000 to secood realization of non-cash assets) A, capital 30% of 2,30,000 69,000 B, capital 10% of 2,30,000 23,000 C, capital 40% of 2,30,000 92,000 D, capital 10% of 2,30,000 23,000 Loss on realisation 23,0000 to allocate loss on realisation to porothers) Account payable 1, 09,000 cash 109,000 It to recood payment of porothership liabilities) cash 14,000 c, capital 114,000 deficiency by c} (to record payment of capital

(ع) A, capital 185000x 21/74 | 35,473 B, capital 125000x45474 76,014 C, capital 125000x 8/74 13,513 Cash to recood distribution of cash to the partners) 2,25,000

9000 78,000 O cash 40000 1,09,000 Acapital B-Capital C-capital 69,000 1110001 13,000 113000 18,0000 14,000 Thyono Balance 1,25,000 Balance 42000 Balance 99000 Bloc. Dcapital - Cash balance shall be distributed in capital catio 23000 3700d partneos; IA D. Blnc 16,000 90000 16000 Ratio 21 8 45 Note: loss on sealication shall be distributed in profit sharing ratio and cash balance shall be distributed in capital ratio. Cash balance of 1,25,000 shall be divided in capital ratio. capital satio: 42,000
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