In: Accounting
Please solve part 5 to 8
Kendra, Cogley, and Mei share income and loss in a 3:2:1 ratio. The partners have decided to liquidate their partnership. On the day of liquidation their balance sheet appears as follows.
KENDRA, COGLEY, AND MEI Balance Sheet May 31 |
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Assets | Liabilities and Equity | ||||||
Cash | $ | 72,200 | Accounts payable | $ | 251,000 | ||
Inventory | 550,800 | Kendra, Capital | 74,400 | ||||
Cogley, Capital | 167,400 | ||||||
Mei, Capital | 130,200 | ||||||
Total assets | $ | 623,000 | Total liabilities and equity | $ | 623,000 | ||
Required:
For each of the following scenarios, complete the schedule
allocating the gain or loss on the sale of inventory. Prepare
journal entries to record the below transactions. (Do not
round intermediate calculations. Amounts to be deducted or Losses
should be entered with a minus sign. Round your final answers to
the nearest whole dollar.)
(1) Inventory is sold for $604,200.
(2) Inventory is sold for $475,200.
(3) Inventory is sold for $301,800 and any partners with capital
deficits pay in the amount of their deficits.
(4) Inventory is sold for $282,000 and the partners have no assets
other than those invested in the partnership.
5) Complete the schedule allocating the gain or loss on the sale of inventory is $301,800 and any partners with capital deficits pay in the amount of their deficits.
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6) a) Record the sale of inventory.
b) Allocate the gain(loss) on the sale of inventory to the partners.
c) The partner(s) with deficit balances repay the amount of their deficit(s).
d) Record the payment of the liabilities.
e) Record the disbursement of the remaining cash to the partners.
7) Complete the schedule allocating the gain or loss on the sale of inventory $282,000 and the partners have no assets other than those invested in the partnership.
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8) a) Record the sale of inventory for $282,000.
b) Record the allocation of the gain or loss on the sale of inventory to the partners.
c) Assuming that the partners have no assets other than those invested, allocate any partner(s) deficit balances to the remaining partners.
d) Record the payment of the liabilities.
e) Record the disbursement of the remaining cash to the partner(s).
Schedule allocating gain or loss is as follows: | ||||
Sold at $604200 | Sold at $475200 | Sold at $301800 | Sold at $282000 | |
Particulars | Amount ($) | Amount ($) | Amount ($) | Amount ($) |
Sale of inventory | $604,200 | $475,200 | $301,800 | $282,000 |
Cost of Inventory | $550,800 | $550,800 | $550,800 | $550,800 |
Gain /(Loss) on sale of inventory | $53,400 | -$75,600 | -$249,000 | -$268,800 |
Case-I | ||||
Kendra | Cogley | Mei | ||
Opening capital balance | $74,400 | $167,400 | $130,200 | $372,000 |
Add: gain in ratio 3:2:1 | $26,700 | $17,800 | $8,900 | $53,400 |
Adjusted Capital balances | $101,100 | $185,200 | $139,100 | $425,400 |
Journal entries: | ||||
Date | Particulars | L.F | Amount ($) | Amount ($) |
a | Cash | $604,200 | ||
Inventory | $550,800 | |||
Gain on sale of inventory | $53,400 | |||
(For inventory sold) | ||||
b. | Gain on sale of inventory | $53,400 | ||
Kendra Capital | $26,700 | |||
Cogley capital | $17,800 | |||
Mei capital | $8,900 | |||
(For gain distributed) | ||||
c. | Accounts payable | $251,000 | ||
cash | $251,000 | |||
(for accounts payable settled) | ||||
d. | Kendra Capital | $101,100 | ||
Cogley capital | $185,200 | |||
Mei capital | $139,100 | |||
cash (72200+604200-251000) | $425,400 | |||
(For capital balances cleared) |
Case-2 | ||||
Kendra | Cogley | Mei | ||
Opening capital balance | $74,400 | $167,400 | $130,200 | $372,000 |
Less: Loss on sale 3:2:1 | $37,800 | $25,200 | $12,600 | $75,600 |
Adjusted Capital balances | $36,600 | $142,200 | $117,600 | $296,400 |
Journal entries: | ||||
Date | Particulars | L.F | Amount ($) | Amount ($) |
a | Cash | $475,200 | ||
Gain (Loss) on sale of inventory | $75,600 | |||
Inventory | $550,800 | |||
(For inventory sold) | ||||
b. | Kendra Capital | $37,800 | ||
Cogley capital | $25,200 | |||
Mei capital | $12,600 | |||
Gain (Loss) on sale of inventory | $75,000 | |||
(For Loss distributed) | ||||
c. | Accounts payable | $251,000 | ||
cash | $251,000 | |||
(for accounts payable settled) | ||||
d. | Kendra Capital | $36,600 | ||
Cogley capital | $142,200 | |||
Mei capital | $117,600 | |||
cash (72200+475200-251000) | $296,400 | |||
(For capital balances cleared) |
Case-3 | ||||
Kendra | Cogley | Mei | ||
Opening capital balance | $74,400 | $167,400 | $130,200 | $372,000 |
Less: Loss on sale 3:2:1 | $124,500 | $83,000 | $41,500 | $249,000 |
Adjusted Capital balances | -$50,100 | $84,400 | $88,700 | $123,000 |
Journal entries: | ||||
Date | Particulars | L.F | Amount ($) | Amount ($) |
a | Cash | $301,800 | ||
Gain (Loss) on sale of inventory | $249,000 | |||
Inventory | $550,800 | |||
(For inventory sold) | ||||
b. | Kendra Capital | $124,500 | ||
Cogley capital | $83,000 | |||
Mei capital | $41,500 | |||
Gain (Loss) on sale of inventory | $249,000 | |||
(For Loss distributed) | ||||
c. | Cash | $50,100 | ||
Kendra Capital | $50,100 | |||
d. | Accounts payable | $251,000 | ||
cash | $251,000 | |||
(for accounts payable settled) | ||||
f. | Cogley capital | $84,400 | ||
Mei capital | $88,700 | |||
cash (72200+301800+50100-251000) | $173,100 | |||
(For capital balances cleared) |
Case-4 | ||||
Kendra | Cogley | Mei | ||
Opening capital balance | $74,400 | $167,400 | $130,200 | $372,000 |
Less: Loss on sale 3:2:1 | $134,400 | $89,600 | $44,800 | $268,800 |
Adjusted Capital balances | -$60,000 | $77,800 | $85,400 | $103,200 |
Loss of Kendra shared by C & N | $60,000 | -$40,000 | -$20,000 | $0 |
Adjusted Capital balances | $0 | $37,800 | $65,400 | $103,200 |
Journal entries: | ||||
Date | Particulars | L.F | Amount ($) | Amount ($) |
a | Cash | $282,000.00 | ||
Gain (Loss) on sale of inventory | $268,800.00 | |||
Inventory | $550,800.00 | |||
(For inventory sold) | ||||
b. | Kendra Capital | $134,400.00 | ||
Cogley capital | $89,600.00 | |||
Mei capital | $44,800.00 | |||
Gain (Loss) on sale of inventory | $268,800.00 | |||
(For Loss distributed) | ||||
c. | Cogley's Capital | $60,000.00 | ||
Meri 's Capital | $40,000.00 | |||
Kendra's Capital | $20,000.00 | |||
d. | Accounts payable | $251,000.00 | ||
cash | $251,000.00 | |||
(for accounts payable settled) | ||||
f. | Cogley capital | $37,800.00 | ||
Mei capital | $65,400.00 | |||
cash (72200+282000+-251000) | $103,200.00 | |||
(For capital balances cleared) |