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LILLAH WULA PIOVIENI IZUA LiquidLII VI a partTED Lur Kendra, Cogley, and Mei share income and loss in a 3:2:1 ratio. The partners have decided to liquidate their partnership. On the day of liquidation their balance sheet appears as follows. Assets Cash Inventory KENDRA, COGLEY, AND MEI Balance Sheet May 31 Liabilities and Equity $ 84,800 Accounts payable 538,200 Kendra, Capital Cogley, Capital Mei, Capital $623,000 Total liabilities and equity $252,000 74,200 166,950 129,850 $623,000 Total assets Required: For each of the following scenarios, complete the schedule allocating the gain or loss on the sale of inventory. Prepare ournal entries to record the below transactions. (Do not round intermediate calculations. Amounts to be deducted or Losses should be entered with a minus sign. Round your final answers to the nearest whole dollar) 11) Inventory is sold for $621,000. 12) Inventory is sold for $468,000 (3) Inventory is sold for $329,400 and any partners with capital deficits pay in the amount of their deficits. 14) Inventory is sold for $240,600 and the partners have no assets other than those invested in the partnership.

Answer 1

a) Inventory is sold for $621000

Determination of gain or loss
Proceeds from sale of Inventory	$621,000
Inventory Cost	$538,200
Gain on sale of Inventory	$82,800

Allocation of the gain (Loss) to the partners
		KENDRA		COGLEY		MEI	TOTAL
Initial capital balance		$74,200		$166,950		$129,850	$371,000
Allocation of the gain (Loss)	3	$41,400	2	$27,600	1	$13,800	82800
Capital Balance after gain (loss)		$115,600		$194,550		$143,650	453800

General Journal	Debit	Credit
a) Sale of Inventory
Realization A/c	$621,000
Inventory		$621,000
(Inventory sold on dissolution of partnership firm)
b) Allocation of gain (Loss) on the sale of inventory to the partners
Realization A/c	$82,800
Kendra's A/c		$41,400
Cogley's A/c		$27,600
Mei's A/c		$13,800
(Realization gain transferred to partners capital account)
C) Payment of liabilities
Accounts Payable	$252,000
Cash		$252,000
(Outstanding accounts payable paid)
d) Disbursement of remaining cash to the partners
Kendra's A/c	$226,900
Cogley's A/c	$151,267
Mei's A/c	$75,633
Cash		$453,800
(Remaining cash {$84800+$621000-$252000= $453800 distributed in their PSR)

b) Inventory is sold for $468000

Determination of gain or loss
Proceeds from sale of Inventory	$468,000
Inventory Cost	$538,200
Gain (Loss) on sale of Inventory	($70,200)

Allocation of the gain (Loss) to the partners
		KENDRA		COGLEY		MEI	TOTAL
Initial capital balance		$74,200		$166,950		$129,850	$371,000
Allocation of the gain (Loss)	3	($35,100)	2	($23,400)	1	($11,700)	($70,200)
Capital Balance after gain (loss)		$39,100		$143,550		$118,150	300800

General Journal	Debit	Credit
a) Sale of Inventory
Realization A/c	$468,000
Inventory		$468,000
(Inventory sold on dissolution of partnership firm)
b) Allocation of gain (Loss) on the sale of inventory to the partners
Kendra's A/c	$35,100
Cogley's A/c	$23,400
Mei's A/c	$11,700
Realization A/c		$70,200
(Realization Loss transferred to partners capital account)
C) Payment of liabilities
Accounts Payable	$252,000
Cash		$252,000
(Outstanding accounts payable paid)
d) Disbursement of remaining cash to the partners
Kendra's A/c	$150,400
Cogley's A/c	$100,267
Mei's A/c	$50,133
Cash		$300,800
(Remaining cash {$84800+$468000-$252000= $300800 distributed in their PSR)

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