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In: Accounting

The partners in Crane Company decide to liquidate the firm when the balance sheet shows the...

The partners in Crane Company decide to liquidate the firm when the balance sheet shows the following.

Crane Company
Balance Sheet
May 31, 2020

Assets

Liabilities and Owners’ Equity

Cash

$29,900

Notes payable

$13,000

Accounts receivable

24,500

Accounts payable

26,800

Allowance for doubtful accounts

(1,400

)

Salaries and wages payable

4,300

Inventory

34,800

A. Jamison, capital

33,800

Equipment

21,600

S. Moyer, capital

23,100

Accumulated depreciation—equipment

(5,700

)

P. Roper, capital

2,700

$103,700

$103,700


The partners share income and loss 5:3:2. During the process of liquidation, the following transactions were completed in the following sequence.

1.

A total of $53,100 was received from converting noncash assets into cash.

2.

Gain or loss on realization was allocated to partners.

3.

Liabilities were paid in full.

4.

P. Roper paid his capital deficiency.

5.

Cash was paid to the partners with credit balances.

Prepare the entries to record the transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

b.

Post to the cash and capital accounts. (Post entries in the order of journal entries presented in the previous part. If ending balance is 0 enter 0 in the column for the normal balance for the account.)

c. Assume that Roper is unable to pay the capital deficiency. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

(1)

Prepare the entry to allocate Roper’s debit balance to Jamison and Moyer.

(2)

Prepare the entry to record the final distribution of cash.

Solutions

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