The partners of Donald, Chief & Berry LLP decided to liquidate on August 1, 2011

Question

The partners of Donald, Chief & Berry LLP decided to liquidate on August 1, 2011. The balance sheet of the partnership is as follows, with profit and loss ratio of 25%, 45%, and 30%, respectively.

Donald, Chief, & Berry LLP

Balance Sheet Aug 1, 2011

The disposal of Other Assets with a carrying amount of $200,000 realized $140,000, and all available cash was distributed.

a.) Prepare the journal entry for Donald, Chief, & Berry LLP on August 1, 2011 to record the realization of Other Assets.

b.) Prepare the journal entry for Donald, Chief, & Berry LLP on August 1, 2011 to record payment of liabilities.

c.) Prepare the journal entry for Donald, Chief, & Berry LLP on August 1, 2011, to record the offset of the loan receivable from Donald.

d.) Prepare the schedule to compute the cash payments to the partners.

Assets Liabilities & Partner's Capital Cash 60,000 Trade accounts payable 130,000 Loan Receivable from Donald 40,000 Loan payable to Chief 60,000 Other Assets 500,000 Donald, capital 140,000 Chief Capital 160,000 Berry, capital 110,000 Total 600,000 Total 600,000

Explanation / Answer

Prepare the journal entry for Donald, Chief, & Berry LLP on August 1, 2011 to record the realization of Other Assets.

  Prepare the journal entry for Donald, Chief, & Berry LLP on August 1, 2011 to record payment of liabilities.

Prepare the journal entry for Donald, Chief, & Berry LLP on August 1, 2011, to record the offset of the loan receivable from Donald.

  Prepare the schedule to compute the cash payments to the partners.

DR CR Cash 140000 Donald, Capital 15000 Chief, Capital 27000 Berry, Capital 18000 Other Asset 200000

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