42, A, B, C, and D, which share profits in a ratio of S :3:1: 1 respectively, decide to dissolve their partnership firm. The current capital balances are $60,000, $40,000, $30,000, and $10,000, respectively. Prior to the sale of the assets of the partnership firm, the partners agree on the following: (1) Inventory of the partnership firm, with a book value of $12. 000, must be taken over by A for $15. 000, (2) A partnership claim of $20,000 must be. paid and the existing cash balance of $30,000 must be distributed in a manner that would avoid having to recover cash from a partner. What journal entries must be prepared to record the above agreement?
42, A, B, C, and D, which share profits in a ratio of S :3:1: 1 respectively, decide to dissolve their partnership firm. The current capital balances are $60,000, $40,000, $30,000, and $10,000, respectively. Prior to the sale of the assets of the partnership firm, the partners agree on the following: (1) Inventory of the partnership firm, with a book value of $12. 000, must be taken over by A for $15. 000, (2) A partnership claim of $20,000 must be. paid and the existing cash balance of $30,000 must be distributed in a manner that would avoid having to recover cash from a partner. What journal entries must be prepared to record the above agreement?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:42, A, B, C, and D, which share profits in a ratio of S 3: 1:1 respectively, decide to dissolve
their partnership firm. The current capital balances are $60,000, $40,000, $30,000, and
$10,000, respectively. Prior to the sale of the assets of the partnership firm, the partners
agree on the following
(1) Inventory of the partnership firm, with a book value of $12. 000, must be taken over by A
for $15. 000,
(2) A partnership claim of $20,000 must be. paid and the existing cash balance of $30,000
must be distributed in a manner that would avoid having to recover cash from a partner.
What journal entries must be prepared to record the above agreement?
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