Question 6 Sedgwick Company at December 31 has cash $22,738, noncash assets $102

Question

Question 6

Sedgwick Company at December 31 has cash $22,738, noncash assets $102,100, liabilities $54,390, and the following capital balances: Floyd $46,620 and DeWitt $23,828. The firm is liquidated, and $116,900 in cash is received for the noncash assets. Floyd and DeWitt income ratios are 65% and 35%, respectively.

Prepare the entries to record: (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No.

Account Titles and Explanation

Debit

Credit

(a)

(b)

(c)

(d)

Open Show Work

(a) The sale of noncash assets. (b) The allocation of the gain or loss on realization to the partners. (c) Payment of creditors. (d) Distribution of cash to the partners.

Explanation / Answer

1. cash Dr.$116900

To gain on realisation of asset $14800

To non cash assets $102100

2 .   gain on realisation of asset Dr.$14800

To Floyd capital(14800*65%) $9620

To DeWitt capital(14800 * 35%) $5180

3. Liabilites Dr.$54390

To cash $54390

4. Floyd capital Dr.$55411.2

DeWitt capital Dr. $29836.8

To cash $85248

adjustment entry for capital deficiency:

DeWitt capital Dr.$828.8

To Floyd capital     $828.8

Note:-   distribution of cash statement

cash + noncash asset = liabilities +    Floyd capital + DeWitt capital

Balances 22738 + 102100 = 54390 + 46620 + 23828

sale of asset

and gain allocate 116900 + (102100) = - + 9620 + 5180

balance 139638 + 0 = 54390 + 56240 + 29008

payment of liability (54390) + 0 = (54390) + - + -   

Balance 85248 + 0 = 0 + 56240 + 29008

cash distribution (85248) + 0 = 0 + (55411.2) + (29836.8)

(excess)/short payment    0 + 0 = 0 + 828.8 + (828.8)

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.