Question

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

1 Solution 2 3 Entries for realisation Account details Cash Loss on realisation Other assets (To record realization of noncash assets) Debit credit 180000 230000 410000 4 5 6 7 69000 9 23000 92000 10 11 12 A, capital 30 of 230000 b,capital 10% C,capital 40% of 230000 D, capita 10% of 230000 Loss on realisation (To allocate loss on realization to partners) Account payble 23000 230000 13 14 109000 15 cash 109000 16 17 14000 18 14000 19 20 (To record payment of partnership liabilities) Cash C, capital (To record payment of capital deficiency by c) A, Capital 125000*21/74 B, capital 125000*45/74 C, capital 125000*8/74 Cash (To record distribution of cash to the partners) 35473 21 76014 13513 22 23 125000 24

1 2 3 4 cash 40000 A capital 69000 B capital 23000 c capital 92000 D capital 23000 5 109000 111000 113000 78000 39000 6 180000 14000 7 14000 125000 Balance 42000 Balance 90000 Balance 0 Balance 16000 8 Balance 9 10 Cash balanceshall be distributed in capital ratio of partners 11 12 13 14 Capital ratio A B D 42000 90000 16000 RATIO 21 45 8 Note - Loss on realisation shall be distributed in profit sharing ratio and cash balance shall be distributed in capital ratio Cash balance of 125000 shal be divided in capital ratio 15 16 17 18 19 NOTE - PLEASE UPVOTE IT SHALL BE A GREAT FAVOR THANKS 20 21 22