Question

The Field, Brown & Snow partnership was begun with investments by the partners as follows: Field, $129,100; Brown, $167,700; and Snow, $154,600. The operations did not go well, and the partners eventually decided to liquidate the partnership, sharing all losses equally. On May 31, after all assets were converted to cash and all creditors were paid, only $46,100 in partnership cash remained.

2. Assume that any partner with a deficit agrees to pay cash to the partnership to cover the deficit. Present the journal entries on May 31 to record (a) the cash receipt from the deficient partner(s) and (b) the final disbursement of cash to the partners.

Journal entry worksheet

Record the receipt of cash from the deficient partner(s).

Note: Enter debits before credits.

Transaction General Journal Debit Credit (a) Journal entry worksheet Record the disbursement of the remaining cash to the partner(s). Note: Enter debits before credits. Transaction General Journal Debit Credit (b) 3. Assume that any partner with a deficit is not able to reimburse the partnership. Present journal entries (a) to transfer the deficit of any deficient partners to the other partners and (b) to record the final disbursement of cash to the partners. Journal entry worksheet Record the transfer of the deficit of any deficient partner(s) to the other partner(s). Note: Enter debits before credits. Transaction General Journal Debit Credit (a) Journal entry worksheet Record the disbursement of the remaining cash to the partner(s). Note: Enter debits before credits. Transaction General Journal Debit Credit (b)

Answer 1

Solution 2:

Balance of total partner's capital before liquidation loss = $129,100 + $167,700 + $154,600 = $451,400

Cash remaining after sale of assets and payment of liabilities = $46,100

Liquidation loss = $451,400 - $46,100 = $405,300

This loss will be distributed between partner in their profit sharing ratio i.e. 1:1:1, therefore loss of $135,100 will be distributed to each partner.

Captial balances of partners after distribution of loss:

Field - $129,100 - $135,100 = $6,000 Debit

Brown - $167,700 - $135,100 = $32,600 Credit

Snow - $154,600 - $135,100 = $19,500 Credit

Journal Entries
S. No	Particulars	Debit	Credit
a	Cash A/c Dr	$6,000.00
	To Field's Capital A/c		$6,000.00
	(Being cash received from field)
b	Brown's Capital A/c Dr	$32,600.00
	Snow's Capital A/c Dr	$19,500.00
	To Cash A/c		$52,100.00
	(Being cash distributed to partners on liquidation)

Solution 3:

If partner with deficit (Field) is not able to reimburse the partnership then debit balance of $6,000 will be distributed to reamining partner in ratio of 1:1.

Journal Entries
S. No	Particulars	Debit	Credit
a	Brown's Capital A/c Dr	$3,000.00
	Snow's Capital A/c Dr	$3,000.00
	To Field's Capital A/c		$6,000.00
	(Being Field's debit balance distributed to remaining partners)
b	Brown's Capital A/c Dr	$29,600.00
	Snow's Capital A/c Dr	$16,500.00
	To Cash A/c		$46,100.00
	(Being cash distributed to partners on liquidation)