Curly, Larry and Moe decided to liquidate the the CLM partnership on December 31

Question

Curly, Larry and Moe decided to liquidate the the CLM partnership on December 31 of the current year, and go their separate ways. The partners share income and losses on a 1:2:3 basis respectively. As at December 31, the partnership had cash of $18,000, non-cash assets of $115,000, and liabilities of $15,000. Before selling their non-cash assets, the partners had capital balances of $45,000, $63,000, anid $10,000, respectively. The non-cash assets were sold for $82,000. (1) Prepare journal entries to record the liquidation of the partnership assuming that all of the partners have the personal resources to cover a deficit in their capital accounts. Required: (2) Prepare journal entries to record the liquidation of the partnership assuming that all of the partners do not have the personal resources to cover a deficit in their capital accounts. ***Explanations are not required and leave a blank line between journal entries*** note: There are no marks allocated to the liquidation schedule. Completion of the Liquidqtion Schedule is optional and is provided for your convenience only.

Explanation / Answer

a personal resources cover deficiency Cash 82000 P/L A/c 33000 To non cash asset 115000 Liabilites 15000 To Cash 15000 Curly capital 5500 Larry capital 11000 Moe Capital 16500     To P/L A/c 33000 Curly capital 32415.25 Larry capital 45381.36 Moe Capital 7203.39     To Cash 85000 Cash 13703.39    To Moe Capital 13703.39 Curly capital 7084.75 Larry capital 6618.64 To Cash 13703.39 b personal resources do not cover deficiency Curly capital 7084.75 Larry capital 6618.64    To Moe Capital 13703.39

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