Question

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
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.

	Step 1) Determination of Gain (Loss) Proceeds from the sale of inventory $301,800 Inventory cost Step 2) Allocation of the Gain (Loss) to the Partners. KENDRA COGLEY MEI Total Initial capital balances $74,400 $167,400 $130,200 $372,000 Allocation of gains (losses) Capital balances after gains (losses)

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.

Step 1) Determination of gain (loss) Proceeds from the sale of inventory $282,000 Inventory Cost Step 2) Allocation of the gain (loss) to the partners and distribution of deficit(s) KENDRA COGLEY MEI Total Initial capital balances $74,400 $167,400 $130,200 $372,000 Allocation of gains (losses) Capital balances after gains (losses) Allocation of deficit balance Capital balances after deficit allocation

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).

Answer 1

1.

Inventory Balance	550800
Sale value	604200
Profit on sale	53400
	Total	Kendra	Cogley	Mei
	53400	74400	167400	130200
Distribution of profit	-53400	26700	17800	8900
New Balances	0	101100	185200	139100

Sale of inventory
Account Title	Debit	Credit
Cash	604200
Inventory		550800
Gain on sale of inventory		53400
Distribution of profit to partners
Account Title	Debit	Credit
Gain on sale of inventory	53400
Kendra. Capital		26700
Cogley, Capital		17800
Mei, Capital		8900

2.

Inventory Balance	550800
Sale value	475200
Profit on sale	-75600
	Total	Kendra	Cogley	Mei
	-75600	74400	167400	130200
Distribution of profit	75600	-37800	-25200	-12600
New Balances	0	36600	142200	117600

Sale of inventory
Account Title	Debit	Credit
Cash	475200
Loss on sale of inventory	75600
Inventory		550800
Distribution of loss to partners
Account Title	Debit	Credit
Kendra. Capital	37800
Cogley, Capital	25200
Mei, Capital	12600
Loss on sale of inventory		75600

3.

Inventory Balance	550800
Sale value	301800
Profit on sale	-249000
	Total	Kendra	Cogley	Mei
	-249000	74400	167400	130200
Distribution of profit	249000	-124500	-83000	-41500
New Balances	0	-50100	84400	88700

Sale of inventory
Account Title	Debit	Credit
Cash	301800
Loss on sale of inventory	249000
Inventory		550800
Distribution of loss to partners
Account Title	Debit	Credit
Kendra. Capital	124500
Cogley, Capital	83000
Mei, Capital	41500
Loss on sale of inventory		249000
Partner with capital deficit pays for the deficit
Account Title	Debit	Credit
Cash	50100
Kendra, Capital		50100

6.

a. Sale of inventory
Account Title	Debit	Credit
Cash	301800
Loss on sale of inventory	249000
Inventory		550800
b. Distribution of loss to partners
Account Title	Debit	Credit
Kendra. Capital	124500
Cogley, Capital	83000
Mei, Capital	41500
Loss on sale of inventory		249000
c. Partner with capital deficit pays for the deficit
Account Title	Debit	Credit
Cash	50100
Kendra, Capital		50100
d. Payment of liabilities
Account Title	Debit	Credit
Accounts Payable	251000
Cash		251000
e. Distribution of remaining cash
Account Title	Debit	Credit
Kendra. Capital	34620
Cogley, Capital	77895
Mei, Capital	60585
Cash		173100

Working:

Inventory Balance	550800
Sale value	301800
Profit on sale	-249000
	Total	Kendra	Cogley	Mei
	-249000	74400	167400	130200
Distribution of profit	249000	-124500	-83000	-41500
New Balances	0	-50100	84400	88700
	Cash
Cash balance, beginning	72200
Sale of inventory	301800
Cash paid by Kendra	50100
Total Cash available	424100
Payment of liabilities	-251000
Balance cash available	173100
	Cash	Kendra	Cogley	Mei
Balances	173100	0	84400	88700
Cash distributed	-173100	34620	77895	60585
	Kendra	Cogley	Mei	Total
Original capital balances	74400	167400	130200	372000
	20%	45%	35%

7.

Inventory Balance	550800
Sale value	282000
Profit on sale	-268800
	Total	Kendra	Cogley	Mei
	-268800	74400	167400	130200
Distribution of loss	268800	-134400	-89600	-44800
New Balances	0	-60000	77800	85400
Distribution of deficit		60000	-40000	-20000
		0	37800	65400

8.

a. Sale of inventory
Account Title	Debit	Credit
Cash	282000
Loss on sale of inventory	268800
Inventory		550800
b. Distribution of loss to partners
Account Title	Debit	Credit
Kendra. Capital	134400
Cogley, Capital	89600
Mei, Capital	44800
Loss on sale of inventory		268800
c. Allocation of deficit of Kendra to others
Account Title	Debit	Credit
Cogley, Capital	40000
Mei, capital	20000
Kendra, Capital		60000
d. Payment of liabilities
Account Title	Debit	Credit
Accounts Payable	251000
Cash		251000
e. Distribution of remaining cash
Account Title	Debit	Credit
Cogley, Capital	37800
Mei, Capital	65400
Cash		103200

Working:

	Cash
Cash balance, beginning	72200
Sale of inventory	282000
Total Cash available	354200
Payment of liabilities	-251000
Balance cash available	103200
	Cash	Kendra	Cogley	Mei
Balances	103200	0	37800	65400
Cash distributed	-103200	0	-37800	-65400