Chapter 12, Problem 12.5BPR

1.

To determine

Partnership

It is that form of organization which is owned and managed by two or more persons who invest and share the profits and losses according to a pre-determined ratio.

Liquidating Partnership

The winding up of process of partnership is called liquidation of partnership. At the time of liquidation of partnership, loss on realization or gain on realization is determined.

To prepare:  A statement of partnership liquidation.

2. a

To determine

To record: The journal entry to allocate the partner’s deficiency, assuming that the partner with capital deficiency declares bankruptcy.