REQUIRED: Prepare working paper for the Statement of Liquidation using the lump sum liquidation method and give all the corresponding journal entries assuming: a. Any capital deficiency is collectible. b. Any capital deficiency is uncollectible
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.
5.1 Al and Tantay are partners sharing profits equally. The condensed
below:
Assets Liabilities and Equity
Cash P1,900 Accounts Payable P 27,200
Merchandise Inventory 16,400 Tantay Capital 5,000
Equipment 21,700 P 47,200 P 47,200
They decided to liquidate and the assets realized the following
amounts in cash:
Accounts Receivable P 4,200
Merchandise 11,200
Equipment 16,000
REQUIRED: Prepare working paper for the Statement of Liquidation using the lump sum liquidation method and give all the corresponding
a. Any capital deficiency is collectible.
b. Any capital deficiency is uncollectible
5.2 The general ledger of the partnership of Hall and Fame shows the following balance sheet accounts before liquidation:
Non-cash Assets P 166,800 Liabilities P 82,840
Hall Loan 10,000
Fame Loan 12,000
Hall Capital 48,500
Fame Capital 13,460
P 166,800 P 166,800
The non-cash assets were sold for P 92,000. Any capital
deficiency is uncollectible. The partners share profits in the ratio of
8:2 for Hall and Fame, respectively.
REQUIRED: Prepare the working paper for the Statement of Liquidation and give all the entries required.
5.3 Barbara and Streisand are partners sharing
and Streisand’s is P 14,000. It is decided by the partners that the
business should be terminated. The firm has liabilities of P 28,800.
Barbara has a loan to the firm in the amount of P 3,600 while
Streisand’s loan is P 2,400. After realization, the cash on hand
amounts to P 30,000. Any deficient partner is insolvent.
REQUIRED: Working paper for the Statement of Liquidation and journal entries.
t partner is insolvent. REQUIRED: Working paper for the Statement of Liquidation and journal entries.
Step by step
Solved in 2 steps with 2 images
