Alex and Bess have been in partnership for many years. The partners, who share profits and losses on a 70:30 basis, respectively, wish to retire and have agreed to liquidate the business. Liquidation expenses are estimated to be $8,000. At the date the partnership ceases operations, the balance sheet is as
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.
Alex and Bess have been in
Cash$68,000
Noncash assets 270,000
Total assets$338,000
Liabilities$49,000
Alex, capital 189,000
Bess, capital 100,000
Total liabilities and capital$338,000
Prepare
- Distributed safe cash payments to the partners.
- Paid $29,400 of the partnership’s liabilities.
- Sold noncash assets for $289,000.
- Distributed safe cash payments to the partners.
- Paid remaining partnership liabilities of $19,600.
- Paid $6,300 in liquidation expenses; no further expenses will be incurred.
- Distributed remaining cash held by the business to the partners.
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