The partners in Crawford Company decide to liquidate the firm when the balance s

Question

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 $27.500 25,000 (1.000) 34,500 21,000 (S,500) $101,500 Notes payable Accounts payable Salaries and wages payable A. Jamison, capital S. Moyer, capital P. Roper, capital $13,500 27.000 4,000 33,000 21,000 3,000 $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. P. Roper paid his capital deficiency. S. Cash was paid to the partners with credit balances.

Explanation / Answer

Allocation summary:

Allocation summary:

No. Account Titles and Explanation Debit Credit 1 Cash 51000 Allowance for doubtful accounts 1000 Accumulated depreciation 5500 Loss on realization 23000 Accounts receivable 25000 Inventory 34500 Equipment 21000 (To record disposal of noncash assets) 2 A. Jamison, Capital (5/10 x $23000) 11500 S. Moyer, Capital (3/10 x $23000) 6900 P. Roper, Capital (2/10 x $23000) 4600 Loss on realization 23000 (To record allocation of loss to partners) 3 Notes payable 13500 Accounts payable 27000 Salaries and wages payable 4000 Cash 44500 (To record payment of iabilities) 4 Cash 1600 P. Roper, Capital 1600 (To record cash brought in for capital deficiency) 5 A. Jamison, Capital 21500 S. Moyer, Capital 14100 Cash 35600 (To record cash distribution to other partners)

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