After the accounts are closed on April 10, prior to liquidating the partnership, the capital accounts of Zach Fairchild, Austin Lowes, and Amber Howard are $37,100, $6,600, and $30,000, respectively. Cash and noncash assets total $8,800 and $74,100, respectively. Amounts owed to creditors total $9,200. The partners share income and losses in the ratio of 1:1:2. Between April 10 and April 30, the noncash assets are sold for $39,300, the partner with the capital deficiency pays the deficiency to the partnership, and the liabilities are paid. Required: 1. Prepare a statement of partnership liquidation, indicating (a) the sale of assets and division of loss, (b) the payment of liabilities, (c) the receipt of the deficiency (from the appropriate partner), and (d) the distribution of cash. Enter any subtractions (balance deficiencies, payments, cash distributions, divisions of loss, sale of assets) as negative numbers using a minus sign. If there is no amount or an amount is zero, enter "0". Fairchild, Lowes, and Howard Statement of Partnership Liquidation For Period April 10-30 Cash + Noncash Assets = Liabilities + Fairchild, Capital (1/4) + Lowes, Capital (1/4) + Howard, Capital (2/4) Balances before realization $ $ $ $ $ $ Sale of assets and division of loss Balances after realization $ $ $ $ $ $ Payment of liabilities Balances after payment of liabilities $ $ $ $ $ $ Receipt of deficiency Balances $ $ $ $ $ $ Cash distributed to partners Final balances $ $ $ $ $ $ 2. Assume the partner with the capital deficiency declares bankruptcy and is unable to pay the deficiency. a. Journalize the entry to allocate the partner's deficiency. For a compound transaction, if an amount box does not require an entry, leave it blank. ACCOUNT DEBIT CREDIT Zach Fairchild, Capital Amber Howard, Capital Austin Lowes, Capital b. Journalize the entry to distribute the remaining cash. For a compound transaction, if an amount box does not require an entry, leave it blank. ACCOUNT DEBIT CREDIT Zach Fairchild, Capital Amber Howard, Capital Cash

After the accounts are closed on April 10, prior to liquidating the partnership, the capital accounts of Zach Fairchild, Austin Lowes, and Amber Howard are $37,100, $6,600, and $30,000, respectively. Cash and noncash assets total $8,800 and $74,100, respectively. Amounts owed to creditors total $9,200. The partners share income and losses in the ratio of 1:1:2. Between April 10 and April 30, the noncash assets are sold for $39,300, the partner with the capital deficiency pays the deficiency to the partnership, and the liabilities are paid. Required: 1. Prepare a statement of partnership liquidation, indicating (a) the sale of assets and division of loss, (b) the payment of liabilities, (c) the receipt of the deficiency (from the appropriate partner), and (d) the distribution of cash. Enter any subtractions (balance deficiencies, payments, cash distributions, divisions of loss, sale of assets) as negative numbers using a minus sign. If there is no amount or an amount is zero, enter "0". Fairchild, Lowes, and Howard Statement of Partnership Liquidation For Period April 10-30 Cash + Noncash Assets = Liabilities + Fairchild, Capital (1/4) + Lowes, Capital (1/4) + Howard, Capital (2/4) Balances before realization $ $ $ $ $ $ Sale of assets and division of loss Balances after realization $ $ $ $ $ $ Payment of liabilities Balances after payment of liabilities $ $ $ $ $ $ Receipt of deficiency Balances $ $ $ $ $ $ Cash distributed to partners Final balances $ $ $ $ $ $ 2. Assume the partner with the capital deficiency declares bankruptcy and is unable to pay the deficiency. a. Journalize the entry to allocate the partner's deficiency. For a compound transaction, if an amount box does not require an entry, leave it blank. ACCOUNT DEBIT CREDIT Zach Fairchild, Capital Amber Howard, Capital Austin Lowes, Capital b. Journalize the entry to distribute the remaining cash. For a compound transaction, if an amount box does not require an entry, leave it blank. ACCOUNT DEBIT CREDIT Zach Fairchild, Capital Amber Howard, Capital Cash

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Required:

1. Prepare a statement of partnership liquidation, indicating (a) the sale of assets and division of loss, (b) the payment of liabilities, (c) the receipt of the deficiency (from the appropriate partner), and (d) the distribution of cash.

Enter any subtractions (balance deficiencies, payments, cash distributions, divisions of loss, sale of assets) as negative numbers using a minus sign. If there is no amount or an amount is zero, enter "0".

Fairchild, Lowes, and Howard Statement of Partnership Liquidation For Period April 10-30
	Cash	+	Noncash Assets	=	Liabilities	+	Fairchild, Capital (1/4)	+	Lowes, Capital (1/4)	+	Howard, Capital (2/4)
Balances before realization	$		$		$		$		$		$
Sale of assets and division of loss
Balances after realization	$		$		$		$		$		$
Payment of liabilities
Balances after payment of liabilities	$		$		$		$		$		$
Receipt of deficiency
Balances	$		$		$		$		$		$
Cash distributed to partners
Final balances	$		$		$		$		$		$

2. Assume the partner with the capital deficiency declares bankruptcy and is unable to pay the deficiency.

a. Journalize the entry to allocate the partner's deficiency. For a compound transaction, if an amount box does not require an entry, leave it blank.

ACCOUNT	DEBIT	CREDIT
Zach Fairchild, Capital
Amber Howard, Capital
Austin Lowes, Capital

b. Journalize the entry to distribute the remaining cash. For a compound transaction, if an amount box does not require an entry, leave it blank.

ACCOUNT	DEBIT	CREDIT
Zach Fairchild, Capital
Amber Howard, Capital
Cash

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement 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, and drawings of a partner.

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