Granger Company wishes to liquidate the firm by distributing the company\'s cash
ID: 2385149 • Letter: G
Question
Granger Company wishes to liquidate the firm by distributing the company's cash to the three partners. Prior to the distribution of cash, the company's balances are: Cash $65,680; Niles, Capital (Cr.) $49,670; Dowagiac, Capital (Dr.) $19,540; and Vandalia, Capital (Cr.) $35,550. The income ratios of the three partners are 2:2:3, respectively. Prepare the entry to record the absorption of Dowagiac's capital deficiency by the other partners.2 DEBIT AND 1 CREDIT
Prepare the entry to record the distribution of cash to the partners with credit balances.
2 DEBIT AND 1 CREDIT
Explanation / Answer
The income ratios of the three partners are 2:2:3. SO Dowagiac, Capital (Dr.) $19,540 is shared by Niles & Vandalia is 2:3 mmddyy Niles, Capital (2/5*19540) Dr 7,816 Vandalia, Capital (3/5*19540)Dr 11,724 DOwagiac, Capital Cr 19,540 (To transferDOwagiac deficiency to Niles & Vandalia) mmddyy Niles, Capital (2/5*65,680) Dr 26,272 Vandalia, Capital (3/5*65,680)Dr 39,408 Cash Cr $65,680 (Distn of Cash to 2 partners. Dowagiac capital acct is reduced to zero)
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