The NOR Partnership is being liquidated. A balance sheet prepared prior to liqui
ID: 2369753 • Letter: T
Question
The NOR Partnership is being liquidated. A balance sheet prepared prior to liquidation is presented below:Assets Liabilities & Equities Cash $240,000 Liabilities $ 160,000 Other Assets 300,000 Rice, Loan 60,000 Nutt, Capital 180,000 Ohm, Capital 60,000 _______ Rice, Capital 80,000 Total Assets $540,000 Total Equities $540,000
Nutt, Ohm, and Rice share profits and losses in a 40:40:20 ratio. All partners are personally insolvent.
Required:
A. Prepare the journal entries necessary to record the distribution of the available cash.
B. Prepare the journal entries necessary to record the completion of the liquidation process, assuming the other assets are sold for $120,000. Assets Liabilities & Equities Cash $240,000 Liabilities $ 160,000 Other Assets 300,000 Rice, Loan 60,000 Nutt, Capital 180,000 Ohm, Capital 60,000 _______ Rice, Capital 80,000 Total Assets $540,000 Total Equities $540,000
Nutt, Ohm, and Rice share profits and losses in a 40:40:20 ratio. All partners are personally insolvent.
Required:
A. Prepare the journal entries necessary to record the distribution of the available cash.
B. Prepare the journal entries necessary to record the completion of the liquidation process, assuming the other assets are sold for $120,000. The NOR Partnership is being liquidated. A balance sheet prepared prior to liquidation is presented below:
Assets Liabilities & Equities Cash $240,000 Liabilities $ 160,000 Other Assets 300,000 Rice, Loan 60,000 Nutt, Capital 180,000 Ohm, Capital 60,000 _______ Rice, Capital 80,000 Total Assets $540,000 Total Equities $540,000
Nutt, Ohm, and Rice share profits and losses in a 40:40:20 ratio. All partners are personally insolvent.
Required:
A. Prepare the journal entries necessary to record the distribution of the available cash.
B. Prepare the journal entries necessary to record the completion of the liquidation process, assuming the other assets are sold for $120,000.
Explanation / Answer
A.
Nutt Ohm Rice
Net Interest (180,000) (60,000) (140,000)
Potential Loss - $300,000 120,000 120,000 60,000
(60,000) 60,000 (80,000)
Potential Loss - $60,000 40,000 (60,000) 20,000
Cash Distribution (20,000) 0 (60,000)
Particulars Dr Cr
Liabilities 160,000
Cash 160,000
Rice, Loan 60,000
Nutt, Capital 20,000
Cash 80,000
B.
Cash 120,000
Nutt, Capital (180,000*40%) 72,000
Ohm, Capital (180,000*40%) 72,000
Rice, Capital (180,000*20%) 36,000
Other Assets 300,000
Nutt, Capital (12,000*[40/60]) 8,000
Rice, Capital (12,000*[20/60]) 4,000
Ohm, Capital (72,000
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