Answered: Mina Villanueva and Christine Results…

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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Mina Villanueva and Christine Results are about to liquidate their partnership. They each have 200,000 capital balances, and they share profit and losses in a 3:1 ratio, respectively. In addition, the partnership has 250,000 in cash, 450,000 in non-cash assets and 300,000 in accounts payable. Assuming that the non cash assets are sold for 170,000 and that both partners are personally solvent, prepare all the liquidation entries.

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.

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