Question

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 $ 83,500 Accounts payable $ 252,500 Inventory 549,000 Kendra, Capital 76,000 Cogley, Capital 171,000 Mei, Capital 133,000 Total assets $ 632,500 Total liabilities and equity $ 632,500 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 $610,200. (2) Inventory is sold for $453,000. (3) Inventory is sold for $352,200 and any partners with capital deficits pay in the amount of their deficits. (4) Inventory is sold for $246,000 and the partners have no assets other than those invested in the partnership.

Answer 1

1. if Inventory is Sold for $ 610200
Sale of Inventory	6,10,200
Cost of Inventory	5,49,000
Gain on Sale of Inventory	61,200

Allocating the gain or loss on the sale of inventory
	Kendra	Cogley	Mei	Total
Beginning Capital	76,000	1,71,000	1,33,000	3,80,000
Allocation of Gain/(Loss)	30,600	20,400	10,200	61,200
New Capital Balance	1,06,600	1,91,400	1,43,200	4,41,200

No	Account Title	Debit	Credit
a)	Cash	6,10,200
	Inventory		5,49,000
	Gain on Sale of Inventory		61,200
b)	Gain on Sale of Inventory	61,200
	Kendra Capital		30,600
	Cogley Capital		20,400
	Mei Capital		10,200
c)	Accounts Payable	2,52,500
	Cash		2,52,500
d)	Kendra Capital	1,06,600
	Cogley Capital	1,91,400
	Mei Capital	1,43,200
	Cash		4,41,200

2. if Inventory is Sold for $ 453000
Sale of Inventory	4,53,000
Cost of Inventory	5,49,000
Gain/Loss on Sale of Inventory	-96,000

Allocating the gain or loss on the sale of inventory
	Kendra	Cogley	Mei	Total
Beginning Capital	76,000	1,71,000	1,33,000	3,80,000
Allocation of Gain/(Loss)	-48,000	-32,000	-16,000	-96,000
New Capital Balance	28,000	1,39,000	1,17,000	2,84,000

No	Account Title	Debit	Credit
a)	Cash	4,53,000
	Loss on Sale of Inventory	96,000
	Inventory		5,49,000
b)	Kendra Capital	48,000
	Cogley Capital	32,000
	Mei Capital	16,000
	Loss on Sale of Inventory		96,000
c)	Accounts Payable	2,52,500
	Cash		2,52,500
d)	Kendra Capital	28,000
	Cogley Capital	1,39,000
	Mei Capital	1,17,000
	Cash		2,84,000

3. if Inventory is Sold for $ 352200
Sale of Inventory	3,52,200
Cost of Inventory	5,49,000
Gain/Loss on Sale of Inventory	-1,96,800

Allocating the gain or loss on the sale of inventory
	Kendra	Cogley	Mei	Total
Beginning Capital	76,000	1,71,000	1,33,000	3,80,000
Allocation of Gain/(Loss)	-98,400	-65,600	-32,800	-1,96,800
New Capital Balance	-22,400	1,05,400	1,00,200	1,83,200
Add : Capital deficit introduce	22,400
New Capital Balance	-	1,05,400	1,00,200	2,05,600

No	Account Title	Debit	Credit
a)	Cash	3,52,200
	Loss on Sale of Inventory	1,96,800
	Inventory		5,49,000
b)	Kendra Capital	98,400
	Cogley Capital	65,600
	Mei Capital	32,800
	Loss on Sale of Inventory		1,96,800
c)	Accounts Payable	2,52,500
	Cash		2,52,500
d)	Cash	22,400
	Kendra Capital		22,400
e)	Cogley Capital	1,05,400
	Mei Capital	1,00,200
	Cash		2,05,600

4. if Inventory is Sold for $246000
Sale of Inventory	2,46,000
Cost of Inventory	5,49,000
Gain/Loss on Sale of Inventory	-3,03,000

Allocating the gain or loss on the sale of inventory
	Kendra	Cogley	Mei	Total
Beginning Capital	76,000	1,71,000	1,33,000	3,80,000
Allocation of Gain/(Loss)	-1,51,500	-1,01,000	-50,500	-3,03,000
New Capital Balance	-75,500	70,000	82,500	77,000
Add : Capital deficit shared (171:133)	75,500	-42,469	-33,031	-
New Capital Balance	-	27,531	49,469	77,000

No	Account Title	Debit	Credit
a)	Cash	2,46,000
	Loss on Sale of Inventory	3,03,000
	Inventory		5,49,000
b)	Kendra Capital	1,51,500
	Cogley Capital	1,01,000
	Mei Capital	50,500
	Loss on Sale of Inventory		3,03,000
c)	Accounts Payable	2,52,500
	Cash		2,52,500
d)	Cogley Capital	42,469
	Mei Capital	33,031
	Kendra Capital		75,500
e)	Cogley Capital	27,531
	Mei Capital	49,469
	Cash		77,000