March, April, and May have been in partnership for a number of years. The partners allocate all profits and losses on a 3:3:2 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 Accounts receivable Inventory Land, building, and equipment (net) Total assets $ 22,000 106, 000 85,000 49,000 $262,000 Liabilities March, capital April, capital May, capital Total liabilities and capital $ 83,000 36,000 86,000 57,000 $262,000 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.)
March, April, and May have been in partnership for a number of years. The partners allocate all profits and losses on a 3:3:2 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 Accounts receivable Inventory Land, building, and equipment (net) Total assets $ 22,000 106, 000 85,000 49,000 $262,000 Liabilities March, capital April, capital May, capital Total liabilities and capital $ 83,000 36,000 86,000 57,000 $262,000 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.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
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Transcribed Image Text:March, April, and May have been in partnership for a number of years. The partners allocate all profits and losses on a 3:3:2 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
Accounts receivable.
Inventory
Land, building, and equipment (net)
Total assets
a. Sold all inventory for $67,000 cash.
b. Paid $10,800 in liquidation expenses.
c. Paid $51,000 of the partnership's liabilities.
d. Collected $58,000 of the accounts receivable.
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.)
View transaction list
e. Distributed safe payments of cash; the partners anticipate no further liquidation expenses.
f. Sold remaining accounts receivable for 30 percent of face value.
g. Sold land, building, and equipment for $28,000.
h. Paid all remaining liabilities of the partnership.
i. Distributed cash held by the business to the partners.
Journal entry worksheet
<
$ 22,000
106, 000
85,000
49,000
$ 262,000
1
5
Liabilities
March, capital
April, capital
May, capital
Total liabilities and capital
6
7
8
9
$ 83,000
36,000
86,000
57,000
$ 262,000
>
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