Question

Question 5 : The BT Partnership has decided to liquidate after an unsuccessful few years. The following balance sheet is shown for BT Partnership after the closing of the business and the preparation of financial statements on December 31, 2020. The partners share income and losses equally. Cash $1,000 Notes Payable $500 Truck 10,000 Less: Accumulated Depreciation 5,000 Bachman, Capital 3,000 Turner, Capital 2,500 Total Assets $6,000 Total Liabilities and Partner's equity $6,000 BT Partnerships Balance Sheet December 31, 2020 Assets Liabilities Partners' Equity The truck has been sold for $4,500 cash. REQUIRED: Prepare the journal entries for the sale of the inventory and the distribution of the cash to the proper parties on January 1, 2021 below. The partner does not have sufficient personal assets to pay any deficits.

Answer 1

journal entries are as follows

the truck is sold for 5000$. resulting in a loss of $ 500. as shown below

this loss of 500 is shared equally between the two partners, $ 250 each

Notes payable of 500 is paid. This leaves with a cash balance of $ 5000

this $5000 is used to settle the partners capital account as below