After the accounts are closed on February 3, prior to liquidating the partnership, the capital accounts of William Gerloff, Joshua Chu, and Courtney Jewett are $19,680, $4,960, and $21,840, respectively. Cash and noncash assets total $5,100 and $56,140, respectively. Amounts owed to creditors total $14,760. The partners share income and losses in the ratio of 2:1:1. Between February 3 and February 28, the noncash assets are sold for $32,700, 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. Be sure to complete the statement heading. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers (balance deficiencies, payments, cash distributions, divisions of loss), use a minus sign. If there is no amount to be reported for items (a) - (d), the cell can be left blank. However, in the balance rows, a balance of zero MUST be indicated by entering "0". 2. Assume that the partner with the capital deficiency declares bankruptcy and is unable to pay the deficiency. Journalize the entries on Feb. 28 to (a) allocate the partner’s deficiency and (b) distribute the remaining cash. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. CHART OF ACCOUNTSGerloff, Chu, and JewettGeneral Ledger ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 113 Allowance for Doubtful Accounts 114 Interest Receivable 115 Notes Receivable 116 Inventory 117 Supplies 118 Office Supplies 119 Prepaid Insurance 120 Land 123 Building 124 Accumulated Depreciation-Building 125 Equipment 126 Accumulated Depreciation-Equipment 129 Asset Revaluations 133 Patent LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable EQUITY 310 William Gerloff, Capital 311 William Gerloff, Drawing 312 Courtney Jewett, Capital 313 Courtney Jewett, Drawing 314 Joshua Chu, Capital 315 Joshua Chu, Drawing REVENUE 410 Revenues 610 Interest Revenue EXPENSES 510 Cost of Merchandise Sold 520 Salary Expense 521 Advertising Expense 522 Depreciation Expense-Building 523 Depreciation Expense-Equipment 526 Repairs Expense 529 Selling Expenses 531 Rent Expense 533 Insurance Expense 534 Supplies Expense 535 Office Supplies Expense 536 Credit Card Expense 537 Cash Short and Over 538 Property Tax Expense 539 Miscellaneous Expense 710 Interest Expense Labels For Period February 3-28 For the Year Ended February 28 Amount Descriptions Balances after payment of liabilities Balances after realization Balances before realization Capital additions Cash distributed to partners Final balances Less partner withdrawals Net income for the year Payment of liabilities Receipt of deficiency Sale of assets and division of loss Gerloff, Chu, and Jewett Statement of Partnership Liquidation (Please Label Using charts) 1 Cash + Noncash Assets = Liabilities + Capital, Gerloff (2/4) + Capital, Chu (1/4) + Capital, Jewett (1/4) 2 3 4 5 6 7 8 Balances 9 10 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 2 3 4 5 6 Please Answer All Questions Correctly.

After the accounts are closed on February 3, prior to liquidating the partnership, the capital accounts of William Gerloff, Joshua Chu, and Courtney Jewett are $19,680, $4,960, and $21,840, respectively. Cash and noncash assets total $5,100 and $56,140, respectively. Amounts owed to creditors total $14,760. The partners share income and losses in the ratio of 2:1:1. Between February 3 and February 28, the noncash assets are sold for $32,700, 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. Be sure to complete the statement heading. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers (balance deficiencies, payments, cash distributions, divisions of loss), use a minus sign. If there is no amount to be reported for items (a) - (d), the cell can be left blank. However, in the balance rows, a balance of zero MUST be indicated by entering "0". 2. Assume that the partner with the capital deficiency declares bankruptcy and is unable to pay the deficiency. Journalize the entries on Feb. 28 to (a) allocate the partner’s deficiency and (b) distribute the remaining cash. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. CHART OF ACCOUNTSGerloff, Chu, and JewettGeneral Ledger ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 113 Allowance for Doubtful Accounts 114 Interest Receivable 115 Notes Receivable 116 Inventory 117 Supplies 118 Office Supplies 119 Prepaid Insurance 120 Land 123 Building 124 Accumulated Depreciation-Building 125 Equipment 126 Accumulated Depreciation-Equipment 129 Asset Revaluations 133 Patent LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable EQUITY 310 William Gerloff, Capital 311 William Gerloff, Drawing 312 Courtney Jewett, Capital 313 Courtney Jewett, Drawing 314 Joshua Chu, Capital 315 Joshua Chu, Drawing REVENUE 410 Revenues 610 Interest Revenue EXPENSES 510 Cost of Merchandise Sold 520 Salary Expense 521 Advertising Expense 522 Depreciation Expense-Building 523 Depreciation Expense-Equipment 526 Repairs Expense 529 Selling Expenses 531 Rent Expense 533 Insurance Expense 534 Supplies Expense 535 Office Supplies Expense 536 Credit Card Expense 537 Cash Short and Over 538 Property Tax Expense 539 Miscellaneous Expense 710 Interest Expense Labels For Period February 3-28 For the Year Ended February 28 Amount Descriptions Balances after payment of liabilities Balances after realization Balances before realization Capital additions Cash distributed to partners Final balances Less partner withdrawals Net income for the year Payment of liabilities Receipt of deficiency Sale of assets and division of loss Gerloff, Chu, and Jewett Statement of Partnership Liquidation (Please Label Using charts) 1 Cash + Noncash Assets = Liabilities + Capital, Gerloff (2/4) + Capital, Chu (1/4) + Capital, Jewett (1/4) 2 3 4 5 6 7 8 Balances 9 10 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 2 3 4 5 6 Please Answer All Questions Correctly.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Concept explainers

Question

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. Be sure to complete the statement heading. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers (balance deficiencies, payments, cash distributions, divisions of loss), use a minus sign. If there is no amount to be reported for items (a) - (d), the cell can be left blank. However, in the balance rows, a balance of zero MUST be indicated by entering "0".
2.	Assume that the partner with the capital deficiency declares bankruptcy and is unable to pay the deficiency. Journalize the entries on Feb. 28 to (a) allocate the partner’s deficiency and (b) distribute the remaining cash. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.

CHART OF ACCOUNTSGerloff, Chu, and JewettGeneral Ledger

	ASSETS
110	Cash
111	Petty Cash
112	Accounts Receivable
113	Allowance for Doubtful Accounts
114	Interest Receivable
115	Notes Receivable
116	Inventory
117	Supplies
118	Office Supplies
119	Prepaid Insurance
120	Land
123	Building
124	Accumulated Depreciation-Building
125	Equipment
126	Accumulated Depreciation-Equipment
129	Asset Revaluations
133	Patent

	LIABILITIES
210	Accounts Payable
211	Salaries Payable
213	Sales Tax Payable
214	Interest Payable
215	Notes Payable

	EQUITY
310	William Gerloff, Capital
311	William Gerloff, Drawing
312	Courtney Jewett, Capital
313	Courtney Jewett, Drawing
314	Joshua Chu, Capital
315	Joshua Chu, Drawing

	REVENUE
410	Revenues
610	Interest Revenue

	EXPENSES
510	Cost of Merchandise Sold
520	Salary Expense
521	Advertising Expense
522	Depreciation Expense-Building
523	Depreciation Expense-Equipment
526	Repairs Expense
529	Selling Expenses
531	Rent Expense
533	Insurance Expense
534	Supplies Expense
535	Office Supplies Expense
536	Credit Card Expense
537	Cash Short and Over
538	Property Tax Expense
539	Miscellaneous Expense
710	Interest Expense

Labels
For Period February 3-28
For the Year Ended February 28
Amount Descriptions
Balances after payment of liabilities
Balances after realization
Balances before realization
Capital additions
Cash distributed to partners
Final balances
Less partner withdrawals
Net income for the year
Payment of liabilities
Receipt of deficiency
Sale of assets and division of loss

Gerloff, Chu, and Jewett

Statement of Partnership Liquidation

(Please Label Using charts)

1		Cash +	Noncash Assets =	Liabilities +	Capital, Gerloff (2/4) +	Capital, Chu (1/4) +	Capital, Jewett (1/4)
2
3
4
5
6
7
8	Balances
9
10

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3
4
5
6

Please Answer All Questions Correctly.

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.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.