LOT is a partnership owned by Maggie Lafleur, Susan Olay, and Tara Thibert. The
ID: 2493021 • Letter: L
Question
LOT is a partnership owned by Maggie Lafleur, Susan Olay, and Tara Thibert. The partners' profit-and-loss-sharing agreement is 3:1:4, respectively. The adjusted trial balance of the partnership at November 30, 2016 follows:
LOT
Adjusted Trial Balance
Nov 30 2016
Requirement 1. Prepare a statement of partners' equity for the month ended November 30, 2016
Use a separate column for each partner in the statement of partners' equity. Assume no new capital contributions during November. (Use a minus sign or parentheses to show a decrease in capital.)
LOT
Statment of Partners' Equity
Month Ended Nov 30 2016
Requirement 2. Prepare the four closing entries for the month ended November 30, 2016. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)
Start by closing revenues.
Date
Accounts and Explanation
Debit
Credit
Close expenses for the period. (Prepare a single compound journal entry.)
Date
Accounts and Explanation
Debit
Credit
Close Income Summary. (Prepare a single compound journal entry.)
Date
Accounts and Explanation
Debit
Credit
Close withdrawals. (Prepare a single compound journal entry.)
Date
Accounts and Explanation
Debit
Credit
Requirement 3. Thibert decides to withdraw from the partnership on December1, 2016.Her settlement includes all the Merchandise Inventory and all of the Cash in exchange for her equity interest in the partnership. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)
Date
Accounts and Explanation
Debit
Credit
Requirement 4. Immediately after Thibert's withdrawal, Lafleur and Olay decide to liquidate the partnership. They sell the building for $172,000.Then they pay the liabilities and distribute the cash to complete the liquidation. Journalize these liquidation entries. Assume the profit-and-loss-sharing ratios remain the same. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)
Journalize the sale of the non-cash assets for $172000.
Date
Accounts and Explanation
Debit
Credit
Journalize the allocation of any gain or loss on the liquation of the non-cash assets. (Prepare a single compound journal entry.)
Date
Accounts and Explanation
Debit
Credit
Journalize the payoff of liabilities.
Date
Accounts and Explanation
Debit
Credit
Journalize the distribution of the remaining cash to the partners.
Date
Accounts and Explanation
Debit
Credit
Explanation / Answer
1. LOT Statment of Partners' Equity
Month Ended Nov 30 2016
Working Notes:-
Loss is calculated as under:-
Sales 65000
Cost of Goods Sold (38000)
Salaries Exp (26000)
Rent exp (16000)
Balance (15000)
This balance is the loss which is share among the memebrs in their profit/loss sharing ratio i.e.3:1:4
2.
Start by closing revenues.
Date
Accounts and Explanation
Debit
Credit
Profit & Loss Account
(Being revenue transferred in P/L A/c
)
Close expenses for the period. (Prepare a single compound journal entry.)
Date
Accounts and Explanation
Debit
Credit
Cost of Goods Sold
Salaries Exp
Rent exp
Being expenses transfer to P/L A/c.
Close Income Summary. (Prepare a single compound journal entry.)
Date
Accounts and Explanation
Debit
Credit
Olay Capital
Thibert Capital
Profit & Loss Account
Being Loss transfer to Capital A/c
Close withdrawals. (Prepare a single compound journal entry.)
Date
Accounts and Explanation
Debit
Credit
Olay Capital
Thibert Capital
Drwaing Account
Being Drawings Transfer to Capital A/c
3.
Date
Accounts and Explanation
Debit
Credit
Cash
Merchandise Inventory
Lafleur capital
Olay Capital
10875
3625
Being account of Thibert is seetled and remaining amount distributed in Lafleur & Olay Capital in the ratio 3:1.
4.
Journalize the sale of the non-cash assets for $172000.
Date
Accounts and Explanation
Debit
Credit
Accumalted Depreciation
Realisation Account
building
Being asset sold and loss transfer to realisation account
Journalize the allocation of any gain or loss on the liquation of the non-cash assets. (Prepare a single compound journal entry.)
Date
Accounts and Explanation
Debit
Credit
Olay Capital
Realisation Account
Being liquadation loss distributed int he ratio 3:1
Journalize the payoff of liabilities.
Date
Accounts and Explanation
Debit
Credit
Mortage Payable
Cash
(Being liabilities paid off)
Journalize the distribution of the remaining cash to the partners.
Date
Accounts and Explanation
Debit
Credit
Olay Capital
Cash
(Being final amount paid after liqudation to partners)
Lafleut Olay Thibert Total Capital 50000 65000 35000 150000 Drawing (9000) (3000) (5000) (17000) Loss (5625) (1875) (7500) (15000) 35375 60125 22500 118000
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