David Wallace, Olena Dunn, and Danny Lin were partners in a commercial architect firm and showed the following account balances as of December 31, 2020: Cash Equipment Accum. Deprec. Equipment Accounts Payable Notes Payable David Wallace, Capital Olena Dunn, Capital Danny Lin, Capital Account balances December 31, 2020 $ 40,300 $ 191,000 $ 102,000 $ 8,300 $ 25,000 $ 44,000 $ 27,000 $ 25,000 Due to several unprofitable periods, the partners decided to liquidate the partnership. The equipment was sold for $69,000 on January 1, 2021. The partners share any profit (loss) in the ratio of 2:1:1 for Wallace, Dunn, and Lin, respectively. Required: 1. Complete the schedule. (Negative answers should be indicated by a minus sign.) Cash Equipment Accum. deprec. Equipment Accounts Pay. Notes Pay. David Wallace, Capital Olena Dunn, Capital Danny Lin, Capital Account balance, December 31, 2020 $40,300 $191,000 $102,000 $8,300 $25,000 $44,000 $27,000 $25,000 Sale of equipment Balance $40,300 $191,000 $102,000 $8,300 $25,000 $44,000 $27,000 $25,000 Payment of Liability Balance $40,300 $191,000 $102,000 $8,300 $25,000 $44,000 $27,000 $25,000 2. Prepare the liquidation entries (sale of equipment, allocation of gain/loss, payment of creditors, final distribution of cash). 1 Record the sale of equipment.

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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Question

David Wallace, Olena Dunn, and Danny Lin were partners in a commercial architect firm and showed the following account balances as of December 31, 2020:

	Cash		Equipment	Accum. Deprec. Equipment		Accounts Payable	Notes Payable		David Wallace, Capital	Olena Dunn, Capital		Danny Lin, Capital
Account balances December 31, 2020	$	40,300		$	191,000		$	102,000		$	8,300		$	25,000	$	44,000	$	27,000	$	25,000

Due to several unprofitable periods, the partners decided to liquidate the partnership. The equipment was sold for $69,000 on January 1, 2021. The partners share any profit (loss) in the ratio of 2:1:1 for Wallace, Dunn, and Lin, respectively.

Required:
1. Complete the schedule. (Negative answers should be indicated by a minus sign.)

	Cash	Equipment	Accum. deprec. Equipment	Accounts Pay.	Notes Pay.	David Wallace, Capital	Olena Dunn, Capital	Danny Lin, Capital
Account balance, December 31, 2020	$40,300	$191,000	$102,000	$8,300	$25,000	$44,000	$27,000	$25,000
Sale of equipment
Balance	$40,300	$191,000	$102,000	$8,300	$25,000	$44,000	$27,000	$25,000
Payment of Liability
Balance	$40,300	$191,000	$102,000	$8,300	$25,000	$44,000	$27,000	$25,000