Hooks and Franklin are in the process of liquidating their partnership. They sha
ID: 2350112 • Letter: H
Question
Hooks and Franklin are in the process of liquidating their partnership. They share profits and losses in a ratio of 3:1. They have sold all the non cash assets of the partnership. The transactions for the sales are as follows:___________________________________________________
Date Transactions
___________________________________________________
May 15 Equipment, with a book value of $10,000 was sold for $12,000.
May 17 Accounts receivable worth $7,000 sold to a finance broker: $6,800.
May 20 Merchandise inventory which cost $3,000, was sold for $1,900.
___________________________________________________
Record the journal entries for the sale of non cash assets by using the general journal.
Instructions:
1. Remember that the journal entries have to be made for both gain and loss.
2. Pass journal entries separately for each transaction.
Explanation / Answer
May 15 Equipment, with a book value of $10,000 was sold for $12,000: Profit $ 2000 May 17 Accounts receivable worth $7,000 sold to a finance broker for $ 6800:Loss $ (200) May 20 Merchandise inventory which cost $3,000, was sold for $1,900: Loss $ (1100). Hooks: Profit $ 1500 Loss $ (150) Loss $ (825) Franklin Profit $ 500 Loss $ (50) Loss $ (275) Realisation Dr 20000 To Equipment 10000 To Accounts rec 7000 To inventory 3000 Equipment Dr 12000 Account rec Dr 6800 inventory Dr 1900 To realisation 20000 To profit 700 Profit Dr 700 ToHooks 525 To Franklin 175
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