Richard and Overhill are equal partners in the R & O Roofing firm. In the proces

Question

Richard and Overhill are equal partners in the R & O Roofing firm. In the process of ending the business, they sell all of the partnerships' non-cash assets. Listed below are the assets and liabilities of the business:

Assets:

Cash in Bank $10000

Accounts Recievable$6000

Merchandise Inventory $21000

Equipment$30000

Liabilities:

Accounts Payable $7750

Partners Equity:

Richards Capital$29625

Overhills Capital$29625

Liquidation Transactions:

a. Customers will pay their accounts in full before the liquidation date. Receipt No. 35.

b. Merchandise inventory was sold for $20000 resulting in $1000 loss to the partnership. Reciept No. 36.

c. Equipment was sold for $35000 resulting in a gain of $5000 reciept No.37.

d. Accounts payable will be paid in full. Check No. 309.

1. Complete the liquidation transactions outlined above.
2. How much cash will each partner receive at the final liquidation?

Explanation / Answer

DR Cash 6,000 CR Accounts Receivable 6,000 DR Cash 20,000 DR Richards, capital 500 DR Overhills, capital 500 CR Inventory 21,000 DR Cash 35,000 CR Equipment 30,000 CR Richards, capital 2,500 CR Overhills, capital 2,500 DR Accounts payable 7,750 CR Cash 7,750 Total cash at end will be 10,000+6,000+20,000+35,000-7,750= 63,250. Each partner gets 63,250/2= 31,625

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