Partners Maness and Joiner have decided to liquidate their business. The ledger shows the following account balances Cash Inventory $ 25,000 Accounts Payable 120,000 Maness, Capital Joiner, Capital $15,000 65,000 65,000 Maness and Joiner share profits and losses in an 8:2 ratio. During the first month of liquidation, half the inventory was sold for $40,000, and $10,000 of the accounts payable was paid. During the second month, the rest of the inventory was sold for $30,000, and the remaining accounts payable were paid. Cash was distributed at the end of each month, and the liquidation was completed at the end of the second month. Required: Prepare a statement of partnership realization and liquidation with a schedule of safe payments for the two-month liquidation period.
Partners Maness and Joiner have decided to liquidate their business. The ledger shows the following account balances Cash Inventory $ 25,000 Accounts Payable 120,000 Maness, Capital Joiner, Capital $15,000 65,000 65,000 Maness and Joiner share profits and losses in an 8:2 ratio. During the first month of liquidation, half the inventory was sold for $40,000, and $10,000 of the accounts payable was paid. During the second month, the rest of the inventory was sold for $30,000, and the remaining accounts payable were paid. Cash was distributed at the end of each month, and the liquidation was completed at the end of the second month. Required: Prepare a statement of partnership realization and liquidation with a schedule of safe payments for the two-month liquidation period.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Partners Maness and Joiner have decided to liquidate their business. The ledger shows the following account balances.
Cash
Inventory
$ 25,000
120,000
Accounts Payable
Maness, Capital
Joiner, Capital
$15,000
65,000
65,000
Maness and Joiner share profits and losses in an 8:2 ratio. During the first month of liquidation, half the inventory was sold for
$40,000, and $10,000 of the accounts payable was paid. During the second month, the rest of the inventory was sold for $30,000, and
the remaining accounts payable were paid. Cash was distributed at the end of each month, and the liquidation was completed at the
end of the second month.
Required:
Prepare a statement of partnership realization and liquidation with a schedule of safe payments for the two-month liquidation period.
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