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Question 1 A, B, and C plan to liquidate their Ocean Breeze Pool and Spa business. They have always shared profit and losses in a ratio of 1:4:5 ratio, and on the day of liquidation their balance sheet appeared as follows: Ocean Breeze Pool and Spa Balance Sheet as at June 30, 2020 $ S Fixed Assets Machinery (net of depreciation) 451,250 Current Assets Cash 68,750 Less: Current liabilities Accounts payable 130,375 Net current assets (61,625) 389.625 Capital: A B C 76,250 200,875 112,500 389,625 Required Show the disposal, the gain or loss allocation, and the final distribution of the cash in each of the following independent cases assuming that: a) The machinery is sold for $488,130. b) The machinery is sold for $375,000. c) The machinery is sold for $212,500, and any partners with resulting deficits can and do pay in the amount of their deficits. d) The machinery is sold for $187,500, and the partners have NO assets other than those invested in the business.

Question 1 A, B, and C plan to liquidate their Ocean Breeze Pool and Spa business. They have always shared profit and losses in a ratio of 1:4:5 ratio, and on the day of liquidation their balance sheet appeared as follows: Ocean Breeze Pool and Spa Balance Sheet as at June 30, 2020 $ S Fixed Assets Machinery (net of depreciation) 451,250 Current Assets Cash 68,750 Less: Current liabilities Accounts payable 130,375 Net current assets (61,625) 389.625 Capital: A B C 76,250 200,875 112,500 389,625 Required Show the disposal, the gain or loss allocation, and the final distribution of the cash in each of the following independent cases assuming that: a) The machinery is sold for $488,130. b) The machinery is sold for $375,000. c) The machinery is sold for $212,500, and any partners with resulting deficits can and do pay in the amount of their deficits. d) The machinery is sold for $187,500, and the partners have NO assets other than those invested in the business.

FINANCIAL ACCOUNTING
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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Question 1 A, B, and C plan to liquidate their Ocean Breeze Pool and Spa business. They have always shared profit and losses in a ratio of 1:4:5 ratio, and on the day of liquidation their balance sheet appeared as follows: Ocean Breeze Pool and Spa Balance Sheet as at June 30, 2020 $ $ Fixed Assets Machinery (net of depreciation) 451,250 Current Assets Cash 68,750 Less: Current liabilities Accounts payable 130,375 Net current assets (61,625) 389,625 Capital: A B C 76,250 200,875 112,500 389,625 Required Show the disposal, the gain or loss allocation, and the final distribution of the cash in each of the following independent cases assuming that: a) The machinery is sold for $488,130. b) The machinery is sold for $375,000. c) The machinery is sold for $212,500, and any partners with resulting deficits can and do pay in the amount of their deficits. d) The machinery is sold for $187,500, and the partners have NO assets other than those invested in the business.
Transcribed Image Text:Question 1 A, B, and C plan to liquidate their Ocean Breeze Pool and Spa business. They have always shared profit and losses in a ratio of 1:4:5 ratio, and on the day of liquidation their balance sheet appeared as follows: Ocean Breeze Pool and Spa Balance Sheet as at June 30, 2020 $ $ Fixed Assets Machinery (net of depreciation) 451,250 Current Assets Cash 68,750 Less: Current liabilities Accounts payable 130,375 Net current assets (61,625) 389,625 Capital: A B C 76,250 200,875 112,500 389,625 Required Show the disposal, the gain or loss allocation, and the final distribution of the cash in each of the following independent cases assuming that: a) The machinery is sold for $488,130. b) The machinery is sold for $375,000. c) The machinery is sold for $212,500, and any partners with resulting deficits can and do pay in the amount of their deficits. d) The machinery is sold for $187,500, and the partners have NO assets other than those invested in the business.
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