Allocating profits and losses to the partners, accounting for the liquidation of a partner...

Allocating profits and losses to the partners, accounting for the liquidation of a partnership

ABAX is a partnership owned by Alders, Byron, and Calvin, who share profits and losses in the ratio of 1:3:4. The account balances of the partnership at June 30 follow.

Requirements

1. Prepare the June 30 entries to close the revenue, expense, income summary, and drawing accounts.

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2. Insert the opening capital balances in the partners’ capital accounts, post the closing entries to their accounts, and determine each partner’s ending capital.

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3. Prepare the June 30 entries to liquidate the partnership assuming the noncash assets are sold for $120,000.