Fred and George have been in partnership for many years. The partners, who share
ID: 2481244 • Letter: F
Question
Fred and George have been in partnership for many years. The partners, who share profits and losses on a 60:40 basis, respectively, wish to retire and have agreed to liquidate the business. Liquidation expenses are estimated to be $10,000. At the date the partnership ceases operations, the balance sheet is as follows:
Prepare journal entries for the following transactions: (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Fred and George have been in partnership for many years. The partners, who share profits and losses on a 60:40 basis, respectively, wish to retire and have agreed to liquidate the business. Liquidation expenses are estimated to be $10,000. At the date the partnership ceases operations, the balance sheet is as follows:
Explanation / Answer
Journal entries
b) Partners liabilities a/c Cash a/c dr 40,000
To Cash 40,000
(being part of the liabilities paid off)
c) Cash a/c dr 220,000
To Non-Cash assets 220,000
(being sale of non cash assets)
e) Partners liabilities a/c Cash a/c dr 40,000
To Cash 40,000
(being part of the liabilities paid off)
f) Liquidation expences a/c dr 8,000
To Cash a/c 8,000
(being liquidation expences paid)
g) Fred capital a/c dr 139,200
Geogre capital a/c dr 92,800
To Cash a/c 232,000 (being the remaining cash available is distributed to partners in 60:40 ratio)
*{Cash left in the business = cash 100,000 + 220,000 non cash assets = $320,000
Less liabilities = 320,000 - 80000 - 8000 = $232,000 }
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