Lui, Montavo, and Johnson plan to liquidate their Premium Pool and Spa business. They have always shared profit and losses in a 1:4:5 ratio, and on the day of the liquidation their balance sheet appeared as follows: Premium Pool and SpaBalance SheetJune 30, 2020Assets Cash $84,250 Machinery$626,750 Less: Accumulated depreciation 156,000 470,750 Total assets $555,000 Liabilities Accounts payable $159,600 Equity Jim Lui$78,200 Kent Montavo, capital 202,800 Dave Johnson, capital 114,400 Total equity 395,400 Total liabilities and equity $555,000 Requlred:1. Under the assumption that the machinery is sold and the cash is distributed to the proper parties on June 30, 2020, complete theschedule provided below. Show the sale, the gain or loss allocation, and the distribution of the cash in each of the following unrelatedcases:a. The machinery is sold for $526,000. (Negatlve answers should be Indicated by a mlnus slgn.)Premium Pool and SpaJune 30, 2020Accum.Deprec.,MachineryKentDaveJim Lui,СapitalAccountsCashMachineryMontavo,СapitalJohnson,CapitalPayableAccount balances June 30, 2020Sale of Machinery for $526,000BalancePayment of liabilitiesBalanceDistribution of cash to partnersBalanceb. The machinery Is sold for $413,000. (Negative answers should be Indicated by a mlnus slgn.)Premium Pool and SpaJune 30, 2020Accum.KentDaveAccountsJim Lui,CashMachineryDeprec.,MachineryMontavo,CapitalJohnson,СapitalPayableCapitalAccount balances June 30, 2020Sale of Machinery for $413,000BalancePayment of liabilitiesBalanceDistribution of cash to partnersBalance c. The machinery Is sold for $194,000, and any partners with resulting deficits can and do pay in the amount of their deficits. (Negatlveanswers should be Indicated by a minus sign.)Premium Pool and SpaJune 30, 2020Accum.KentDaveAccountsPayableJim Lui,СaptalCashMachineryDeprec.,MachineryMontavo,СapitalJohnson,CapitalAccount balances June 30, 2020Sale of Machinery for $194,000BalancePayment of liabilitiesBalanceJohnson pays deficiencyBalanceDistribution of cash to partnersBalanced. The machinery is sold for $225,000, and the partners have no assets other than those Invested In the business. (Negative answersshould be Indicated by a mlnus slgn.)Premium Pool and SpaJune 30, 2020Accum.AccountsPayableJim Lui,СapitalKentMontavo,CapitalDaveJohnson,CashMachineryDeprec.,MachineryСapitalAccount balances June 30, 2020Sale of Machinery for $225,000BalancePayment of liabilitiesBalanceAllocation of deficiencyBalanceDistribution of cash to partnersBalance

Liquidation of Partnership - Liquidation of partnership is the process of selling all the assets…

Answered: Lui, Montavo, and Johnson plan to…

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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Lui, Montavo, and Johnson plan to liquidate their Premium Pool and Spa business. They have always shared profit and losses in a 1:4:5 ratio, and on the day of the liquidation their balance sheet appeared as follows:

Premium Pool and Spa Balance Sheet June 30, 2020
Assets
Cash			$	84,250
Machinery	$	626,750
Less: Accumulated depreciation		156,000		470,750
Total assets			$	555,000
Liabilities
Accounts payable			$	159,600
Equity
Jim Lui	$	78,200
Kent Montavo, capital		202,800
Dave Johnson, capital		114,400
Total equity				395,400
Total liabilities and equity			$	555,000

Requlred:
1. Under the assumption that the machinery is sold and the cash is distributed to the proper parties on June 30, 2020, complete the
schedule provided below. Show the sale, the gain or loss allocation, and the distribution of the cash in each of the following unrelated
cases:
a. The machinery is sold for $526,000. (Negatlve answers should be Indicated by a mlnus slgn.)
Premium Pool and Spa
June 30, 2020
Accum.
Deprec.,
Machinery
Kent
Dave
Jim Lui,
Сapital
Accounts
Cash
Machinery
Montavo,
Сapital
Johnson,
Capital
Payable
Account balances June 30, 2020
Sale of Machinery for $526,000
Balance
Payment of liabilities
Balance
Distribution of cash to partners
Balance
b. The machinery Is sold for $413,000. (Negative answers should be Indicated by a mlnus slgn.)
Premium Pool and Spa
June 30, 2020
Accum.
Kent
Dave
Accounts
Jim Lui,
Cash
Machinery
Deprec.,
Machinery
Montavo,
Capital
Johnson,
Сapital
Payable
Capital
Account balances June 30, 2020
Sale of Machinery for $413,000
Balance
Payment of liabilities
Balance
Distribution of cash to partners
Balance

c. The machinery Is sold for $194,000, and any partners with resulting deficits can and do pay in the amount of their deficits. (Negatlve
answers should be Indicated by a minus sign.)
Premium Pool and Spa
June 30, 2020
Accum.
Kent
Dave
Accounts
Payable
Jim Lui,
Сaptal
Cash
Machinery
Deprec.,
Machinery
Montavo,
Сapital
Johnson,
Capital
Account balances June 30, 2020
Sale of Machinery for $194,000
Balance
Payment of liabilities
Balance
Johnson pays deficiency
Balance
Distribution of cash to partners
Balance
d. The machinery is sold for $225,000, and the partners have no assets other than those Invested In the business. (Negative answers
should be Indicated by a mlnus slgn.)
Premium Pool and Spa
June 30, 2020
Accum.
Accounts
Payable
Jim Lui,
Сapital
Kent
Montavo,
Capital
Dave
Johnson,
Cash
Machinery
Deprec.,
Machinery
Сapital
Account balances June 30, 2020
Sale of Machinery for $225,000
Balance
Payment of liabilities
Balance
Allocation of deficiency
Balance
Distribution of cash to partners
Balance

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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