Question

11. Don, Ellen and Frances are partners that share income in the 6:4:1 ratio. On December 31, Frances withdraws from the partnership when the equities of the partners are Don, $6,000; Ellen, $3,600; and Frances, $2,400. Prepare the journal entry when Frances withdraws from the partnership and is paid using partnership cash of $1,400. 12. GHI Partnership was begun with investments by the partners as follows: G, $131,250; H, $165,000 and I, $153,750. The partners agreed to liquidate the partnership to share losses equally. On May 31, after all assets were converted to cash and creditors were paid, only $30,000 partnership cash remained. Compute the capital account balance of each partner after the liquidation of assets and the payment of creditors. Record the entries to allocate and loss on realization and the distribution of cash of $30,000.

Answer 1

Part 11

Capital Balance of retired partner			$      2,400
Less: Cash paid to retired partner			$      1,400
Allocated to Remaining partner only in ratio of profit - loss sharing (6:4).			$      1,000

Don, Ellen and Frances are partners that share income in the 6:4:1 ratio. On December 31, Frances withdraws from the partnership when the equities of the partners are Don, $6,000; Ellen, $3,600; and Frances, $2,400. Prepare the journal entry when Frances withdraws from the partnership and is paid using partnership cash of $1,400.
Journal entries
Transaction	Account title	Debit	Credit
11	Frances, Capital	2,400
	Don, Capital (1000*(6/10))		600
	Ellen, Capital (1000*(4/10))		400
	Cash		1,400
	(To record Frances withdraws from the partnership and is paid using partnership cash of $1,400.)

Part 12

GHI Partnership was begun with investments by the partners as follows: G, $131,250; H, $165,000 and I, $153,750. The partners agreed to liquidate the partnership to share losses equally. On May 31, after all assets were converted to cash and creditors were paid, only $30,000 partnership cash remained.
Journal entries
Transaction	Account title	Debit	Credit
12a	G, capital (420000/3)	$        140,000
	H, capital	$        140,000
	I, capital	$        140,000
	Loss on realization		$        420,000
	(To record the allocate and loss on realization.)
12b	H, capital	$          25,000
	I, capital	$          13,750
	G, capital		$            8,750
	Cash		$          30,000
	(To record the distribution of cash of $30,000.)

Capital of partner G			$ 131,250
Capital of partner H			$ 165,000
Capital of partner I			$ 153,750
Total Capital balance before liquidation of assets and the payment of creditors			$ 450,000
Less: cash available for partners			$    30,000
Loss on sale of realization			$ 420,000

	Before allocation of loss	Less: effect of loss allocation	Cash received (Paid)
Capital of partner G	$        131,250	$ (140,000)	$    (8,750)
Capital of partner H	$        165,000	$ (140,000)	$    25,000
Capital of partner I	$        153,750	$ (140,000)	$    13,750