March, April, and May have been in partnership for a number of years. The partners allocate all profits and losses on a 2:3:1 basis, respectively. Recently, each partner has become personally insolvent and, thus, the partners have decided to liquidate the business in hopes of remedying their personal financial problems. As of September 1, the partnership’s balance sheet is as follows: Cash $ 28,000 Liabilities $ 110,000 Accounts receivable 118,000 March, capital 42,000 Inventory 97,000 April, capital 92,000 Land, building, and equipment (net) 64,000 May, capital 63,000 Total assets $ 307,000 Total liabilities and capital $ 307,000 Prepare journal entries for the following transactions: (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Sold all inventory for $73,000 cash. Paid $12,600 in liquidation expenses. Paid $57,000 of the partnership’s liabilities. Collected $68,000 of the accounts receivable. Distributed safe payments of cash; the partners anticipate no further liquidation expenses. Sold remaining accounts receivable for 25 percent of face value. Sold land, building, and equipment for $34,000. Paid all remaining liabilities of the partnership. Distributed cash held by the business to the partners.
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.
March, April, and May have been in
| Cash | $ | 28,000 | Liabilities | $ | 110,000 |
| 118,000 | March, capital | 42,000 | |||
| Inventory | 97,000 | April, capital | 92,000 | ||
| Land, building, and equipment (net) | 64,000 | May, capital | 63,000 | ||
| Total assets | $ | 307,000 | Total liabilities and capital | $ | 307,000 |
Prepare journal entries for the following transactions: (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No
Sold all inventory for $73,000 cash.
Paid $12,600 in liquidation expenses.
Paid $57,000 of the partnership’s liabilities.
Collected $68,000 of the accounts receivable.
Distributed safe payments of cash; the partners anticipate no further liquidation expenses.
Sold remaining accounts receivable for 25 percent of face value.
Sold land, building, and equipment for $34,000.
Paid all remaining liabilities of the partnership.
Distributed cash held by the business to the partners.
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