Fred and George have been in partnership for many years. The partners, who share
ID: 2481245 • Letter: F
Question
Fred and George have been in partnership for many years. The partners, who share profits and losses on a 60:40 basis, respectively, wish to retire and have agreed to liquidate the business. Liquidation expenses are estimated to be $10,000. At the date the partnership ceases operations, the balance sheet is as follows:
Prepare a final statement of partnership liquidation.
Fred and George have been in partnership for many years. The partners, who share profits and losses on a 60:40 basis, respectively, wish to retire and have agreed to liquidate the business. Liquidation expenses are estimated to be $10,000. At the date the partnership ceases operations, the balance sheet is as follows:
Explanation / Answer
Liquidation Statement:
Particulars
Amount
Particulars
Amount
Cash
100000
Liabilities
80000
Noncash assets
200000
Liquidation Expense
10000
Realisation Profit
210000
Total
300000
300000
Realisation Profit:
Fred’s profit = 210000*(60/100)
=126000
George’s profit = 210000*(40/100)
= 84000
Table showing Partner’s account:
Particulars
Fred
George
Particulars
Fred
George
By Balance b/d
100000
120000
To, Balance C/f
226000
204000
By Realisation A/c Profit
126000
84000
Total
226000
204000
Total
226000
204000
Particulars
Amount
Particulars
Amount
Cash
100000
Liabilities
80000
Noncash assets
200000
Liquidation Expense
10000
Realisation Profit
210000
Total
300000
300000
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