after the accounts are closed on july 3 2012 prior to liquidating the partnershi
ID: 2351064 • Letter: A
Question
after the accounts are closed on july 3 2012 prior to liquidating the partnership, the cpital accounts of rebecca, austin, and ricardo are 22400, 5300, and 31900, respectively. cash and non cash assets total 8800 and 68800 respectively. amounts owed to creditors total 18000 the partners share income and losses in the ratio 2:1:1. between july 3 and 29 the noncash assets are sold for 33200 the partner with the capital deficiency to the partnership and liabilities are paid..instructions:
prepare a statement of partnership liquidation indicating the sale of assets and division of loss the payment and liabilities, the receipt of the deficiency ( from the appropriate partner) and the distribution of cash
2. assume the partner with thecapital deficiency declares bankruptcy and is unable to pay the deficiency. journalize the entries to allocate the partners deficiency and b. the distribute the remaining cash.
Explanation / Answer
think you have missing information about sale of non-cash assets. To solve this, I assume it to be $32,600 and Income sharing ratio that has been assumed 25%(Harken), 25%(Sedlacek) and 50%(Eldridge) Non-Cash Cash Assets = Liab.+HarKen+Sedlacek+Eldrige Balances before realization 7,800 61,400 8,000 31,000 5,700 24,500 Sale of assets and division of loss 32,600 -61,400 -7,200 -7,200 -14,400 Balances after realization 40,400 0 8,000 23,800 -1500 10,100 Payment of liabilities -8,000 0 -8,000 -- -- -- Balances after payment of liabilities 32,400 0 0 23,800 -1500 10,100 Receipt of deficiency 1,500 -- -- -- +1,500 -- Balances 33,900 -- -- 23,800 0 10,100 Cash distrib. to partners -33,900 -- -- -23,800 -- -10,100 Final balan. 0 0 0 2. Assume the partner with the capital deficiency declares bankruptcy and is unable to pay the deficiency. a. Journalize the entries to allocate the partner's deficiency. If an amount box does not require an entry, leave it blank. Kris Harken, Capital $500 Amy Eldridge, Capital $1,000 Brett Sedlacek $1,500 The deficiency in Sedlacek capital account would be absorbed by solvent partners in their profit sharing ratio i.e. 25:50 or 1/3 (Harken) and 2/3(Eldridge). ______________________________________________ b. Journalize the entries to distribute the remaining cash. If an amount box does not require an entry, leave it blank. Kris Harken, Capital (23,800-500) $23,300 Amy Eldridge, Capital (10,100 - 1,000) $9,100
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