Question
In: Accounting
After closing the accounts on July 1, prior to liquidating the partnership, the capital account balances...
After closing the accounts on July 1, prior to liquidating the partnership, the capital account balances of Gold, Porter, and Sims are $28,500, $40,200, and $18,000, respectively. Cash, noncash assets, and liabilities total $45,900, $74,700, and $33,900, respectively. Between July 1 and July 29, the noncash assets are sold for $59,700, the liabilities are paid, and the remaining cash is distributed to the partners. The partners share net income and loss in the ratio of 3:2:1.
Prepare a statement of partnership liquidation for the period July 1-29. Enter any subtractions (balance deficiencies, payments, cash distributions, divisions of loss, sale of assets) as negative numbers using a minus sign. If an amount is zero, enter in "0".
| Gold, Porter, and Sims | ||||||
| Statement of Partnership Liquidation | ||||||
| For the Period Ending July 1-29 | ||||||
| Cash + | Noncash Assets = | Liabilities + | Capital Gold (3/6) + | Capital Porter (2/6) + | Capital Sims (1/6) | |
| 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 | $ | $ | $ | $ | $ | $ |
Solutions
Expert Solution
Schedule of cash payment
|
Cash |
Non cash assets |
liabilities |
Gold, Capital |
Porter, Capital |
Sims capital | |
|
Balance before liquidation |
45,900 |
74,700 |
33,900 |
28,500 |
40,200 |
18,000 |
|
sales of non cash assets and allocation of gain |
59,700 |
- 74,700 |
0 |
- 7,500 |
- 5,000 |
- 2,500 |
|
Balances after realization |
105,600 |
0 |
33,900 |
21,000 |
35,200 |
15,500 |
|
payment of liabilities |
- 33,900 |
- 33,900 |
||||
|
Balances after payment of liabilities |
71,700 |
0 |
0 |
21,000 |
35,200 |
15,500 |
|
cash distribution to partners |
- 71,700 |
0 |
0 |
- 21,000 |
- 35,200 |
- 15,500 |
|
final balances |
0 |
0 |
0 |
0 |
0 |
Sale price of non cash assets = $59,700
Book value of non cash assets = $74,700
Loss on disposal of assets = Book value of non cash assets - Sale price of non cash assets
= 74,700 - 59,700
= $15,000
Loss to be shared by Gold = 15,000 x 3/6
= $7,500
Loss to be shared by Porter = 15,000 x 2/6
= $5,000
Loss to be shared by Sims = 15,000 x 1/6
= $2,500
Please ask if you have any query related to the question. Thank you
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