Kim, Nicolas, and Troy are general partners in KNT Partnership sharing profits and losses in the ratio of 2:4:4, respectively. The partnership suffered financial distress and the partners decided to liquidate the partnership in December 2019. Accounts, after revaluation, adjustment, and correction, had the following ledger balances: Cash P 90,000 Accounts Receivable 205,000 Allowance for Doubtful Accounts 5,000 Merchandise Inventory 180,000 Equipment Accumulated Depreciation Equipment Accounts Payable Kim, Loan [Loan Payable - Kim] Troy, Loan [Loan Payable Troy] Kim, Capital Nicolas, Capital Troy, Capital 600,000 102,000 182,000 18,000 90,000 100,000 213,000 365,000 For the independent cases that follow in the course of winding up, prepare a statement of liquidation and necessary journal entries to record the liquidation process: A. The entire net receivable was collected, all inventories were sold at cost, and equipment was sold at its carrying value. B. Only 90% of net receivable was collected, all inventories were sold at 10% below cost, and equipment was sold for P450,000. C. Only 80% of net receivable was collected, all inventories were sold at 25% above cost, and equipment was sold for P500,000. D. Only 70% of net receivable was collected, all inventories were sold at 25% of their cost, and equipment was sold for P110,000. The deficient partner/s was/were determined to be solvent. E. (1) Only 50% of net receivable was collected, all inventories were sold at 25% of their cost, and equipment was sold for P105,000. The deficient partner/s was/were determined to be insolvent. (2) Only 60% of net receivable was collected, all inventories were sold at 30% of their cost, and equipment was sold for P160,250. The deficient partner/s was/were determined to be insolvent.
Kim, Nicolas, and Troy are general partners in KNT Partnership sharing profits and losses in the ratio of 2:4:4, respectively. The partnership suffered financial distress and the partners decided to liquidate the partnership in December 2019. Accounts, after revaluation, adjustment, and correction, had the following ledger balances: Cash P 90,000 Accounts Receivable 205,000 Allowance for Doubtful Accounts 5,000 Merchandise Inventory 180,000 Equipment Accumulated Depreciation Equipment Accounts Payable Kim, Loan [Loan Payable - Kim] Troy, Loan [Loan Payable Troy] Kim, Capital Nicolas, Capital Troy, Capital 600,000 102,000 182,000 18,000 90,000 100,000 213,000 365,000 For the independent cases that follow in the course of winding up, prepare a statement of liquidation and necessary journal entries to record the liquidation process: A. The entire net receivable was collected, all inventories were sold at cost, and equipment was sold at its carrying value. B. Only 90% of net receivable was collected, all inventories were sold at 10% below cost, and equipment was sold for P450,000. C. Only 80% of net receivable was collected, all inventories were sold at 25% above cost, and equipment was sold for P500,000. D. Only 70% of net receivable was collected, all inventories were sold at 25% of their cost, and equipment was sold for P110,000. The deficient partner/s was/were determined to be solvent. E. (1) Only 50% of net receivable was collected, all inventories were sold at 25% of their cost, and equipment was sold for P105,000. The deficient partner/s was/were determined to be insolvent. (2) Only 60% of net receivable was collected, all inventories were sold at 30% of their cost, and equipment was sold for P160,250. The deficient partner/s was/were determined to be insolvent.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Question
![Kim, Nicolas, and Troy are general partners in KNT Partnership sharing profits and losses in the ratio of 2:4:4,
respectively. The partnership suffered financial distress and the partners decided to liquidate the partnership in December
2019. Accounts, after revaluation, adjustment, and correction, had the following ledger balances:
Cash
P 90,000
Accounts Receivable
205,000
Allowance for Doubtful Accounts
5,000
Merchandise Inventory
180,000
Equipment
Accumulated Depreciation Equipment
Accounts Payable
Kim, Loan [Loan Payable - Kim]
Troy, Loan [Loan Payable Troy]
Kim, Capital
Nicolas, Capital
Troy, Capital
600,000
102,000
182,000
18,000
90,000
100,000
213,000
365,000
For the independent cases that follow in the course of winding up, prepare a statement of liquidation and necessary journal
entries to record the liquidation process:
A. The entire net receivable was collected, all inventories were sold at cost, and equipment was sold at its carrying
value.
B. Only 90% of net receivable was collected, all inventories were sold at 10% below cost, and equipment was sold
for P450,000.
C. Only 80% of net receivable was collected, all inventories were sold at 25% above cost, and equipment was sold
for P500,000.
D. Only 70% of net receivable was collected, all inventories were sold at 25% of their cost, and equipment was sold
for P110,000. The deficient partner/s was/were determined to be solvent.
E. (1) Only 50% of net receivable was collected, all inventories were sold at 25% of their cost, and equipment was
sold for P105,000. The deficient partner/s was/were determined to be insolvent.
(2) Only 60% of net receivable was collected, all inventories were sold at 30% of their cost, and equipment was
sold for P160,250. The deficient partner/s was/were determined to be insolvent.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F64bfe502-e735-4301-8b9b-d0b7ecff4cec%2Ff1f6c36a-041e-477a-8e34-45f9f35742d2%2Fcdo587q_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Kim, Nicolas, and Troy are general partners in KNT Partnership sharing profits and losses in the ratio of 2:4:4,
respectively. The partnership suffered financial distress and the partners decided to liquidate the partnership in December
2019. Accounts, after revaluation, adjustment, and correction, had the following ledger balances:
Cash
P 90,000
Accounts Receivable
205,000
Allowance for Doubtful Accounts
5,000
Merchandise Inventory
180,000
Equipment
Accumulated Depreciation Equipment
Accounts Payable
Kim, Loan [Loan Payable - Kim]
Troy, Loan [Loan Payable Troy]
Kim, Capital
Nicolas, Capital
Troy, Capital
600,000
102,000
182,000
18,000
90,000
100,000
213,000
365,000
For the independent cases that follow in the course of winding up, prepare a statement of liquidation and necessary journal
entries to record the liquidation process:
A. The entire net receivable was collected, all inventories were sold at cost, and equipment was sold at its carrying
value.
B. Only 90% of net receivable was collected, all inventories were sold at 10% below cost, and equipment was sold
for P450,000.
C. Only 80% of net receivable was collected, all inventories were sold at 25% above cost, and equipment was sold
for P500,000.
D. Only 70% of net receivable was collected, all inventories were sold at 25% of their cost, and equipment was sold
for P110,000. The deficient partner/s was/were determined to be solvent.
E. (1) Only 50% of net receivable was collected, all inventories were sold at 25% of their cost, and equipment was
sold for P105,000. The deficient partner/s was/were determined to be insolvent.
(2) Only 60% of net receivable was collected, all inventories were sold at 30% of their cost, and equipment was
sold for P160,250. The deficient partner/s was/were determined to be insolvent.
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