08)4 12-5A r the accounts are closed on February 3, prior to liquidating the P,
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08)4 12-5A r the accounts are closed on February 3, prior to liquidating the P, the $19,300, S4,500, PR Statement of partnership liquidation Amounts owed to creditors total $15,000. The partners share income and losses pectivel t capital accounts of William Gerloff, Joshua Chu, and Courtney Jewett are s , respectively. Cash and noncash assets total $5,200 and $55,900 34 300 and the the partner with the capital deficiency pays the deficiency to the partnershi liabilities are paid. of 2:1:1. Between February 3 and February 28, the noncash assets are sold forExplanation / Answer
1. Statement of partnership liquidation:
Cash
Non Cash assets
Liabilities
William
Joshua
Courtney
Balance before realisaton
5200
55900
15000
19300
4500
22300
Sale of asset and division of loss
34300
-55900
-10800
-5400
-5400
Balance after realisaton
39500
0
15000
8500
-900
16900
Payment of liabilities
-15000
0
-15000
Balance after payment of liability
24500
0
0
8500
-900
16900
Receipt of deficiency
900
900
Balances
25400
0
0
8500
0
16900
Cash distributed to partners
-25400
-16933
0
-8467
Final balances
0
0
0
-8433
0
8433
2. There is a deficiency of $900 for Joshua and declared bankrupt. The $900 will have to be cut from other partners balances i the remaining ratio of 2:1.
(a)
William capital $600
Courtney capital $300
To Joshua capital $900
(b) Remaining cash is $24,500
William capital $16,333
Courtney capital $8,167
Cash $24,500
William will also need to pay Courtney. Entry will be:
Courtney capital $8,433
William capital $8,433
Below is the table for workings:
Cash
Non Cash assets
Liabilities
William
Joshua
Courtney
Balance before realisaton
5200
55900
15000
19300
4500
22300
Sale of asset and division of loss
34300
-55900
-10800
-5400
-5400
Balance after realisaton
39500
0
15000
8500
-900
16900
Payment of liabilities
-15000
0
-15000
Balance after payment of liability
24500
0
0
8500
-900
16900
Receipt of deficiency
0
-600
900
-300
Balances
24500
0
0
7900
0
16600
Cash distributed to partners
-24500
-16333
0
-8167
Final balances
0
0
0
-8433
0
8433
Cash
Non Cash assets
Liabilities
William
Joshua
Courtney
Balance before realisaton
5200
55900
15000
19300
4500
22300
Sale of asset and division of loss
34300
-55900
-10800
-5400
-5400
Balance after realisaton
39500
0
15000
8500
-900
16900
Payment of liabilities
-15000
0
-15000
Balance after payment of liability
24500
0
0
8500
-900
16900
Receipt of deficiency
900
900
Balances
25400
0
0
8500
0
16900
Cash distributed to partners
-25400
-16933
0
-8467
Final balances
0
0
0
-8433
0
8433
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