Problem K-3 The partners in Crawford Company decide to liquidate the firm when t

Question

Problem K-3 The partners in Crawford Company decide to liquidate the firm when the balance sheet shows the following CRAWFORD COMPANY Balance Sheet May 31, 2017 Assets Liabilities and Owners' Equity Cash Accounts receivable Allowance for doubtful accounts Inventory Equipment Accumulated depreciation-equipment $13,500 27,000 4,000 33,000 21,000 3,000 $101,500 $27,500 Notes payable 25,000 Accounts payable (1,000) Salaries and wages payable 34,500 A. Jamison, capital 21,000 S. Moyer, capital (5,500) P. Roper, capital $101,500 The partners share income and loss 5:3:2. During the process of liquidation, the following transactions were completed in the following sequence 1 A total of $51,000 was received from converting noncash assets into cash 2. Gain or loss on realization was allocated to partners. 3. Liabilities were paid in full 4. P. Roper paid his capital deficiency 5. Cash was paid to the partners with credit balances

Explanation / Answer

No. Account Title and Exlpanation Debit Credit 1 Notes payable 13500 Accounts payable 27000 Salaries and wages payable 4000 Realisation A/c 29500 Accounts Receivable 24000 Inventory 34500 Equipment 15500 (Balance transfer to realisation A/c) 2 Cash A/c 51000 Realisation A/c 51000 (Cash realised against non-cash assets) 3 Realisation A/c 44500 Cash A/c 44500 (Liabilities paid off) 4 A. Jamison, capital 11500 S. Moyer, capital 6900 P.Roper, capital 4600 Realisation 23000 (Loss on realisation transfer to capital account) 5 A. Jamison, capital 21500 S. Moyer, capital 14100 Cash 34000 P.Roper 1600 CASH Realisation 51000 Realisation 44500 P.Roper 3900 A. Jamison, capital 21500 Balance 25200 S. Moyer, capital 14100 80100 80100 A. Jamison, capital Realisation 11500 Balance 33000 cash 21500 33000 33000 S. Moyer, capital Realisation 6900 Balance 21000 cash 14100 21000 21000 P.Roper Realisation 4600 Balance 3000 Cash 1600 4600 4600 No. Account Title and Exlpanation Debit Credit 1 A. Jamison, capital 1000 S. Moyer, capital 600 P.Roper 1600 ( to allocate Rpoer's debit balance to jamison and moyer) 2 A. Jamison, capital 21500 S. Moyer, capital 14100 Cash 35600 (to record the final distribution of cash)

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