Exercise 1: After the accounts balance are closed on April 10, 2012 prior the li
ID: 2541884 • Letter: E
Question
Exercise 1: After the accounts balance are closed on April 10, 2012 prior the liquidation the partnership, the capital accounts of Smith, Johnson, and William are $56,800, $12,400 and $35,600 respectively. Cash and non cash assets total $18,900 and $142,400 respectively. Amounts owed to creditors total $56,500. The partners share income and losses in the ratio 2:1:1. In April 20, 2012, the non cash assets are sold for $80,000.
Follow the Instructions:
Prepare a statement of partnership liquidation.
Smith, Johnson and William
Statement of Partnership Liquidation
For Period April 10-20, 2012
___________Capital___________
Cash + Noncash Assets = Liabilities + Smith + Johnson + William
Balances before realization
Sale of assets and division of loss
Balances after realization
Payment of liabilities
Balances after payment of liabilities
Cash distributed to partners
Final Balances
___________Capital___________
Cash + Noncash Assets = Liabilities + Smith + Johnson + William
Balances before realization
Sale of assets and division of loss
Balances after realization
Payment of liabilities
Balances after payment of liabilities
Cash distributed to partners
Final Balances
Explanation / Answer
Statement of Partnership Liquidation
For Period April 10-20, 2012
Cash Non Cash Assets Liabilities Smith (2/4) Johnson (1/4) William (1/4)
Balance 18,900 142,400 56,500 56,800 12,400 35,600
Sale of Assets and division of Loss 80,000 (142,400) - (31,200) (15,600) (15,600)
Sub-total 98,900 - 56,500 25,600 (3,200) 20,000
Payment of Liabilities (56,500) - (56,500) - - -
Sub-total 42,400 - - 25,600 (3,200) 20,000
Cash Bought by Johnson - Deficiency 3,200 3,200
Sub-total 45,600 - - 25,600 - 20,000
Cash paid to Partners (45,600) (25,600) - (20,000)
Sub-total - - - - - -
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