Question

March, April, and May have been in partnership for a number of years. The partners allocate all profits and losses on a 3:3:2 basis, respectively. Recently, each partner has become personally insolvent and, thus, the partners have decided to liquidate the business in hopes of remedying their personal financial problems. As of September 1, the partnership’s balance sheet is as follows:

Cash	$	14,000	Liabilities	$	58,000
Accounts receivable		87,000	March, capital		28,000
Inventory		80,000	April, capital		78,000
Land, building, and equipment (net)		32,000	May, capital		49,000
Total assets	$	213,000	Total liabilities and capital	$	213,000

Prepare journal entries for the following transactions: (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

a.	Sold all inventory for $59,000 cash.
b.	Paid $8,400 in liquidation expenses.
c.	Paid $43,000 of the partnership’s liabilities.
d.	Collected $51,000 of the accounts receivable.
e.	Distributed safe cash balances; the partners anticipate no further liquidation expenses.
f.	Sold remaining accounts receivable for 30 percent of face value.
g.	Sold land, building, and equipment for $20,000.
h.	Paid all remaining liabilities of the partnership.
i.	Distributed cash held by the business to the partners.

Answer 1

Journal Entries :-

Sr. No.	Particulars	Debit($)	Credit($)
a.	Cash A/c Dr.	59,000
	Loss on sale of Inventory A/c Dr.	21,000
	To Inventory A/c		80,000
b.	Liquidation Expenses A/c Dr.	8,400
	To Cash A/c		8,400
c.	Liabilities A/c Dr.	43,000
	To Cash A/c		43,000
d.	Cash A/c Dr.	51,000
	To Accounts Receivable A/c		51,000
e.	March Capital A/c Dr	10,405.16
	April Capital A/c Dr.	28,985.81
	May Capital A/c Dr.	18,209.03
	To Cash A/c		57,600
f.	Cash A/c Dr.	10,800
	Bad Debts A/c Dr.	25,200
	To Accounts Receivable A/c		36,000
g.	Cash A/c Dr.	20,000
	Loss on sale of Land, Building & Equipment A/c	12,000
	To Land, Building and Equipment A/c		32,000
h.	Liabilities A/c Dr.	15,000
	To Cash A/c		15,000
i.	March Capital A/c	5,563.87
	April Capital A/c	15,499.35
	May Capital A/c	9736.78
	To Cash A/c		30,800