Academic Integrity: tutoring, explanations, and feedback — we don’t complete graded work or submit on a student’s behalf.

LOT is a partnership owned by Maggie Lafleur, Susan Olay, and Tara Thibert. The

ID: 2493021 • Letter: L

Question

LOT is a partnership owned by Maggie Lafleur, Susan Olay, and Tara Thibert. The partners' profit-and-loss-sharing agreement is 3:1:4, respectively. The adjusted trial balance of the partnership at November 30, 2016 follows:

LOT

Adjusted Trial Balance

Nov 30 2016

Requirement 1. Prepare a statement of partners' equity for the month ended November 30, 2016
Use a separate column for each partner in the statement of partners' equity. Assume no new capital contributions during November. (Use a minus sign or parentheses to show a decrease in capital.)

LOT

Statment of Partners' Equity

Month Ended Nov 30 2016

Requirement 2. Prepare the four closing entries for the month ended November 30, 2016. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)

Start by closing revenues.

Date

Accounts and Explanation

Debit

Credit

     

     

     

Close expenses for the period. (Prepare a single compound journal entry.)

Date

Accounts and Explanation

Debit

Credit

     

     

     

Close Income Summary. (Prepare a single compound journal entry.)

Date

Accounts and Explanation

Debit

Credit

     

     

     

Close withdrawals. (Prepare a single compound journal entry.)

Date

Accounts and Explanation

Debit

Credit

     

     

     

Requirement 3. Thibert decides to withdraw from the partnership on December1, 2016.Her settlement includes all the Merchandise Inventory and all of the Cash in exchange for her equity interest in the partnership. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)

Date

Accounts and Explanation

Debit

Credit

     

     

     

Requirement 4. Immediately after Thibert's withdrawal, Lafleur and Olay decide to liquidate the partnership. They sell the building for $172,000.Then they pay the liabilities and distribute the cash to complete the liquidation. Journalize these liquidation entries. Assume the profit-and-loss-sharing ratios remain the same. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)

Journalize the sale of the non-cash assets for $172000.

Date

Accounts and Explanation

Debit

Credit

     

     

     

Journalize the allocation of any gain or loss on the liquation of the non-cash assets. (Prepare a single compound journal entry.)

Date

Accounts and Explanation

Debit

Credit

     

     

     

Journalize the payoff of liabilities.

Date

Accounts and Explanation

Debit

Credit

     

     

     

Journalize the distribution of the remaining cash to the partners.

Date

Accounts and Explanation

Debit

Credit

     

     

     

Explanation / Answer

1. LOT Statment of Partners' Equity

Month Ended Nov 30 2016

Working Notes:-

Loss is calculated as under:-

Sales 65000

Cost of Goods Sold (38000)

Salaries Exp (26000)

Rent exp (16000)

Balance (15000)

This balance is the loss which is share among the memebrs in their profit/loss sharing ratio i.e.3:1:4

2.

Start by closing revenues.

Date

Accounts and Explanation

Debit

Credit

Profit & Loss Account

(Being revenue transferred in P/L A/c

)

     

Close expenses for the period. (Prepare a single compound journal entry.)

Date

Accounts and Explanation

Debit

Credit

Cost of Goods Sold

Salaries Exp

Rent exp

Being expenses transfer to P/L A/c.

Close Income Summary. (Prepare a single compound journal entry.)

Date

Accounts and Explanation

Debit

Credit

Olay Capital

Thibert Capital

Profit & Loss Account

Being Loss transfer to Capital A/c

Close withdrawals. (Prepare a single compound journal entry.)

Date

Accounts and Explanation

Debit

Credit

Olay Capital

Thibert Capital

Drwaing Account

Being Drawings Transfer to Capital A/c

3.

Date

Accounts and Explanation

Debit

Credit

Cash

Merchandise Inventory

Lafleur capital

Olay Capital

10875

3625

Being account of Thibert is seetled and remaining amount distributed in Lafleur & Olay Capital in the ratio 3:1.

4.

Journalize the sale of the non-cash assets for $172000.

Date

Accounts and Explanation

Debit

Credit

Accumalted Depreciation

Realisation Account

building

Being asset sold and loss transfer to realisation account

Journalize the allocation of any gain or loss on the liquation of the non-cash assets. (Prepare a single compound journal entry.)

Date

Accounts and Explanation

Debit

Credit

Olay Capital

Realisation Account

Being liquadation loss distributed int he ratio 3:1

Journalize the payoff of liabilities.

Date

Accounts and Explanation

Debit

Credit

Mortage Payable

Cash

(Being liabilities paid off)

Journalize the distribution of the remaining cash to the partners.

Date

Accounts and Explanation

Debit

Credit

Olay Capital

Cash

(Being final amount paid after liqudation to partners)

     

     

   

     

   

     

  

Lafleut Olay Thibert Total Capital    50000 65000 35000 150000 Drawing (9000) (3000) (5000) (17000) Loss (5625) (1875) (7500) (15000) 35375 60125 22500 118000