E 17-8 Statement of partnership liquidation—Partner insolvency case After all partnership assets were converted into cash and all available cash distributed to creditors, the ledger of the Dan, Edd, and Fed partnership showed the following balances: Debit Credit Accounts payable $20,000 Dan capital (40%) 10,000 Edd capital (30%) 60,000 Fed capital (30%) $90,000 $90,000 $90,000 The percentages indicated are residual profit- and loss-sharing ratios. Personal assets and liabilities of the partners are as follows: Dan Edd Fed Personal assets $50,000 $50,000 $100,000 Personal liabilities 45,000 40,000 40,000 The partnership creditors proceed against Fed for recovery of their claims, and the partners settle their claims against each other in accordance with UPA. Required Prepare a schedule to show the phaseout of the partnership and final closing of the books.
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.
E 17-8 Statement of partnership liquidation—Partner insolvency case
After all partnership assets were converted into cash and all available cash distributed to creditors, the ledger of the Dan, Edd, and Fed partnership showed the following balances:
|
|
Debit |
Credit |
|---|---|---|
|
Accounts payable |
|
$20,000 |
|
Dan capital (40%) |
|
10,000 |
|
Edd capital (30%) |
|
60,000 |
|
Fed capital (30%) |
$90,000 |
|
|
|
$90,000 |
$90,000 |
The percentages indicated are residual profit- and loss-sharing ratios. Personal assets and liabilities of the partners are as follows:
|
|
Dan |
Edd |
Fed |
|---|---|---|---|
|
Personal assets |
$50,000 |
$50,000 |
$100,000 |
|
Personal liabilities |
45,000 |
40,000 |
40,000 |
The partnership creditors proceed against Fed for recovery of their claims, and the partners settle their claims against each other in accordance with UPA.
Required
Prepare a schedule to show the phaseout of the partnership and final closing of the books.
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