Question

Statement of Partnership Liquidation

After the accounts are closed on April 10, prior to liquidating the partnership, the capital accounts of Zach Fairchild, Austin Lowes, and Amber Howard are $37,400, $6,600, and $29,700, respectively. Cash and noncash assets total $9,600 and $74,100, respectively. Amounts owed to creditors total $10,000. The partners share income and losses in the ratio of 1:1:2. Between April 10 and April 30, the noncash assets are sold for $39,300, the partner with the capital deficiency pays the deficiency to the partnership, and the liabilities are paid.

Required:

1. Prepare a statement of partnership liquidation, indicating (a) the sale of assets and division of loss, (b) the payment of liabilities, (c) the receipt of the deficiency (from the appropriate partner), and (d) the distribution of cash.

Enter any subtractions (balance deficiencies, payments, cash distributions, divisions of loss, sale of assets) as negative numbers using a minus sign. If there is no amount or an amount is zero, enter "0".

Fairchild, Lowes, and Howard Statement of Partnership Liquidation For Period April 10-30
	Cash	+	Noncash Assets	=	Liabilities	+	Fairchild, Capital (1/4)	+	Lowes, Capital (1/4)	+	Howard, Capital (2/4)
Balances before realization	$fill in the blank 1		$fill in the blank 2		$fill in the blank 3		$fill in the blank 4		$fill in the blank 5		$fill in the blank 6
Sale of assets and division of loss	fill in the blank 7		fill in the blank 8		fill in the blank 9		fill in the blank 10		fill in the blank 11		fill in the blank 12
Balances after realization	$fill in the blank 13		$fill in the blank 14		$fill in the blank 15		$fill in the blank 16		$fill in the blank 17		$fill in the blank 18
Payment of liabilities	fill in the blank 19		fill in the blank 20		fill in the blank 21		fill in the blank 22		fill in the blank 23		fill in the blank 24
Balances after payment of liabilities	$fill in the blank 25		$fill in the blank 26		$fill in the blank 27		$fill in the blank 28		$fill in the blank 29		$fill in the blank 30
Receipt of deficiency	fill in the blank 31		fill in the blank 32		fill in the blank 33		fill in the blank 34		fill in the blank 35		fill in the blank 36
Balances	$fill in the blank 37		$fill in the blank 38		$fill in the blank 39		$fill in the blank 40		$fill in the blank 41		$fill in the blank 42
Cash distributed to partners	fill in the blank 43		fill in the blank 44		fill in the blank 45		fill in the blank 46		fill in the blank 47		fill in the blank 48
Final balances	$fill in the blank 49		$fill in the blank 50		$fill in the blank 51		$fill in the blank 52		$fill in the blank 53		$fill in the blank 54

2. Assume the partner with the capital deficiency declares bankruptcy and is unable to pay the deficiency.

a. Journalize the entry to allocate the partner's deficiency. For a compound transaction, if an amount box does not require an entry, leave it blank.

ACCOUNT	DEBIT	CREDIT
Zach Fairchild, Capital	fill in the blank 56	fill in the blank 57
Amber Howard, Capital	fill in the blank 59	fill in the blank 60
Austin Lowes, Capital	fill in the blank 62	fill in the blank 63

b. Journalize the entry to distribute the remaining cash. For a compound transaction, if an amount box does not require an entry, leave it blank.

ACCOUNT	DEBIT	CREDIT
Zach Fairchild, Capital	fill in the blank 65	fill in the blank 66
Amber Howard, Capital	fill in the blank 68	fill in the blank 69
Cash	fill in the blank 71	fill in the blank 72

Answer 1

Answer:

1.

Fairchild,Lowes and Howard
Satement of Partnership Liquidation
For Period April 10-30
Partculars	Cash	+	Non-Cash Assets	=	Liabilities	+	FairChild Capital (1/4)	+	Lowes, Capital (1/4)	+	Howard, Capital (2/4)
Balance Before Realization	$    9,600		$ 74,100		$ 10,000		$ 37,400		$ 6,600		$ 29,700
Sale of Assets and Division of Loss	$ 39,300		-$ 74,100		$          -		-$   8,700		-$ 8,700		-$ 17,400
Balance after Realization	$ 48,900		$          -		$ 10,000		$ 28,700		-$ 2,100		$ 12,300
Payment of Liabilities	-$ 10,000		$          -		-$ 10,000		$          -
Balance after Payment of Liabilities	$ 38,900		$          -		$          -		$ 28,700		-$ 2,100		$ 12,300
Receipt of Deficiency	$    2,100		$          -		$          -		$          -		$ 2,100
Balances	$ 41,000		$          -		$          -		$ 28,700		$        -		$ 12,300
Cash Distributed to Partners	-$ 41,000		$          -		$          -		-$ 28,700		$        -		-$ 12,300
Final Balances	$          -		$          -		$          -		$          -		$        -		$          -

Notes:Sale of Assets = $34,800,

1/4 of $34,800 = $8,700,

2/4th of $34,800 = $17,400,

2.Journal Entries:

Event	Particulars	Debit	Credit
A	Zach Fairchild. Capital A/c ($2,100 * 1/3)	$       700
	Amber howard. Capital A/c ($2,100 * 2/3)	$   1,400
	To Austin Lowes Capital A/c		$   2,100
B	Zach Fairchild. Capital A/c	$ 28,700
	Amber howard. Capital A/c	$ 12,300
	To Cash A/c		$ 41,000

Note: Cash Distribution values Considered from Statement of Partnership Liquidation.

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