Hewitt and Patel are partners, sharing gains and losses equally. They decide to terminate their partnership. Prior to realization, their capital balances are $6,000 and $4,000, respectively. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $8,000. Question Content Area a. What is the amount of a gain or loss on realization? $fill in the blank a082cef9b012fe9_2 Question Content Area b. How should the gain or loss be divided between Hewitt and Patel? Hewitt $fill in the blank fe57f5f50043050_2 Patel $fill in the blank fe57f5f50043050_4 Question Content Area c. How should the cash be divided between Hewitt and Patel? If an amount is zero, enter "0". blankHewitt and PatelDistribution of Cash Hewitt Patel Capital balances before realization $fill in the blank 2e3dfe08df82014_1 $fill in the blank 2e3dfe08df82014_2 Division of gain or loss on realization fill in the blank 2e3dfe08df82014_3 fill in the blank 2e3dfe08df82014_4 Balances $fill in the blank 2e3dfe08df82014_5 $fill in the blank 2e3dfe08df82014_6 Cash distributed to partners fill in the blank 2e3dfe08df82014_7 fill in the blank 2e3dfe08df82014_8 Final balances $fill in the blank 2e3dfe08df82014_9 $fill in the blank 2e3dfe08df82014_10

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 Content Area

a. What is the amount of a gain or loss on realization?

$fill in the blank a082cef9b012fe9_2

Question Content Area

b. How should the gain or loss be divided between Hewitt and Patel?

Hewitt		$fill in the blank fe57f5f50043050_2
Patel		$fill in the blank fe57f5f50043050_4

Question Content Area

c. How should the cash be divided between Hewitt and Patel? If an amount is zero, enter "0".

blankHewitt and PatelDistribution of Cash

	Hewitt	Patel
Capital balances before realization	$fill in the blank 2e3dfe08df82014_1	$fill in the blank 2e3dfe08df82014_2
Division of gain or loss on realization	fill in the blank 2e3dfe08df82014_3	fill in the blank 2e3dfe08df82014_4
Balances	$fill in the blank 2e3dfe08df82014_5	$fill in the blank 2e3dfe08df82014_6
Cash distributed to partners	fill in the blank 2e3dfe08df82014_7	fill in the blank 2e3dfe08df82014_8
Final balances	$fill in the blank 2e3dfe08df82014_9	$fill in the blank 2e3dfe08df82014_10

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

Step 1: Realization concept

According to the realization concept, the revenue of the firm can only be recognised once it has been earned. The cost concept is promptly followed by the realization concept in the companies. Only when a business realizes a change in an asset's value should it be documented.

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