Question

Larry, Moe, and Curly who share in income and losses in the ratio of 2:3:5, decided to discontinue operations as of April 30, 2013, and liquidate their partnership. After the accounts were closed on April 30, 2013, the following trial balance was prepared:

Larry, Moe, and Curly Post-Closing Trial Balance April 30, 2013

DEBIT

Cash 8,000 Noncash Assets 107,800

CREDIT

Liabilities 35,700 Larry, Capital 13,140 Moe, Capital 25,110 Curly, Capital 41,850

Totals: $115,800 $115,800

Between May 1 and May 18, the noncash assets were sold for $36,800, and the liabilities were paid. INSTRUCTIONS: 1. Assuming that the partner with the capital deficiency pays the entire amount owed to the partnership, prepare a statement of partnership liquidation. 2. Journalize the entries to record: a). the sale of assets. b). the division of loss on the sale of assets. c). the payment of liabilities. d). the receipt of the deficiency e). the distribution of cash to the partners.

Answer 1

date	Particular	debit	credit
a	Cash                                          Dr	36800
	To Non cash Assets		36800
	(sale of non cash assets)
b	larry capital Dr	14200
	Moe capital Dr	21300
	Curly capital Dr	35500
	To Non cash Assets		71000
	(Loss on sale Transferred to Partners Capital A/c)
b	Liabilities Dr	35700
	To cash		35700
	(Liabilities settled for cash)
e	larry capital Dr	1820
	Moe Capital Dr	2730
	Curly Capital Dr	4550
	To cash		9100
	(cash balance tranfered to Partners)

d)since there is no deficiency in cah no such entry is needed