Kendra, Cogley, and Mei share income and loss in a 3:2:1 ratio. The partners hav

Question

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. KENDRA, COGLEY, AND MEI Balance Sheet May 31 Assets Liabilities and Equity Cash $ 83,500 Accounts payable $ 252,500 Inventory 549,000 Kendra, Capital 76,000 Cogley, Capital 171,000 Mei, Capital 133,000 Total assets $ 632,500 Total liabilities and equity $ 632,500 Required: For each of the following scenarios, complete the schedule allocating the gain or loss on the sale of inventory. Prepare journal 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.) (1) Inventory is sold for $610,200. (2) Inventory is sold for $453,000. (3) Inventory is sold for $352,200 and any partners with capital deficits pay in the amount of their deficits. (4) Inventory is sold for $246,000 and the partners have no assets other than those invested in the partnership.

Explanation / Answer

1. if Inventory is Sold for $ 610200 Sale of Inventory          6,10,200 Cost of Inventory          5,49,000 Gain on Sale of Inventory              61,200 Allocating the gain or loss on the sale of inventory Kendra Cogley Mei Total Beginning Capital              76,000          1,71,000         1,33,000          3,80,000 Allocation of Gain/(Loss)              30,600              20,400            10,200              61,200 New Capital Balance          1,06,600          1,91,400         1,43,200          4,41,200 No Account Title Debit Credit a) Cash          6,10,200 Inventory          5,49,000 Gain on Sale of Inventory              61,200 b) Gain on Sale of Inventory              61,200 Kendra Capital              30,600 Cogley Capital              20,400 Mei Capital              10,200 c) Accounts Payable          2,52,500 Cash          2,52,500 d) Kendra Capital          1,06,600 Cogley Capital          1,91,400 Mei Capital          1,43,200 Cash          4,41,200 2. if Inventory is Sold for $ 453000 Sale of Inventory          4,53,000 Cost of Inventory          5,49,000 Gain/Loss on Sale of Inventory            -96,000 Allocating the gain or loss on the sale of inventory Kendra Cogley Mei Total Beginning Capital              76,000          1,71,000         1,33,000          3,80,000 Allocation of Gain/(Loss)            -48,000            -32,000           -16,000            -96,000 New Capital Balance              28,000          1,39,000         1,17,000          2,84,000 No Account Title Debit Credit a) Cash          4,53,000 Loss on Sale of Inventory              96,000 Inventory          5,49,000 b) Kendra Capital              48,000 Cogley Capital              32,000 Mei Capital              16,000 Loss on Sale of Inventory              96,000 c) Accounts Payable          2,52,500 Cash          2,52,500 d) Kendra Capital              28,000 Cogley Capital          1,39,000 Mei Capital          1,17,000 Cash          2,84,000 3. if Inventory is Sold for $ 352200 Sale of Inventory          3,52,200 Cost of Inventory          5,49,000 Gain/Loss on Sale of Inventory         -1,96,800 Allocating the gain or loss on the sale of inventory Kendra Cogley Mei Total Beginning Capital              76,000          1,71,000         1,33,000          3,80,000 Allocation of Gain/(Loss)            -98,400            -65,600           -32,800         -1,96,800 New Capital Balance            -22,400          1,05,400         1,00,200          1,83,200 Add : Capital deficit introduce              22,400 New Capital Balance                       -            1,05,400         1,00,200          2,05,600 No Account Title Debit Credit a) Cash          3,52,200 Loss on Sale of Inventory          1,96,800 Inventory          5,49,000 b) Kendra Capital              98,400 Cogley Capital              65,600 Mei Capital              32,800 Loss on Sale of Inventory          1,96,800 c) Accounts Payable          2,52,500 Cash          2,52,500 d) Cash              22,400 Kendra Capital              22,400 e) Cogley Capital          1,05,400 Mei Capital          1,00,200 Cash          2,05,600 4. if Inventory is Sold for $246000 Sale of Inventory          2,46,000 Cost of Inventory          5,49,000 Gain/Loss on Sale of Inventory         -3,03,000 Allocating the gain or loss on the sale of inventory Kendra Cogley Mei Total Beginning Capital              76,000          1,71,000         1,33,000          3,80,000 Allocation of Gain/(Loss)         -1,51,500        -1,01,000           -50,500         -3,03,000 New Capital Balance            -75,500              70,000            82,500              77,000 Add : Capital deficit shared (171:133)              75,500            -42,469           -33,031                       -   New Capital Balance                       -                27,531            49,469              77,000 No Account Title Debit Credit a) Cash          2,46,000 Loss on Sale of Inventory          3,03,000 Inventory          5,49,000 b) Kendra Capital          1,51,500 Cogley Capital          1,01,000 Mei Capital              50,500 Loss on Sale of Inventory          3,03,000 c) Accounts Payable          2,52,500 Cash          2,52,500 d) Cogley Capital              42,469 Mei Capital              33,031 Kendra Capital              75,500 e) Cogley Capital              27,531 Mei Capital              49,469 Cash              77,000

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