FUNDAMENTAL ACCT PRIN TEXT+CONNECT CODE
15th Edition
ISBN: 9781265564483
Author: Wild
Publisher: MCG
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Chapter 12, Problem 5APSA
To determine
Concept Introduction:
Liquidation of
- Sale of non cash assets and realization of cash.
- Sharing the gain or loss on sale of non cash assets amongst the partners in their income sharing ratio.
- Disbursement of liabilities of partnership using the available cash.
- Distribution of balances cash amongst the partners in their capital ratio.
Requirement-1:
To prepare:
Expert Solution
Explanation of Solution
Journal entries for liquidation of partnership are as follows:
| S.No. | Accounts titles and Explanation | Debit | Credit |
| (a) | Sale of inventory: | ||
| Cash | $ 600,000.00 | ||
| Gain on Sale | $ 62,800.00 | ||
| Inventory | $ 537,200.00 | ||
| (Being inventory sold for cash) | |||
| (b) | Allocation of Gain or loss: | ||
| Gain on Sale | $ 62,800.00 | ||
| Kendra's Capital | $ 31,400.00 | ||
| Cogley's Capital | $ 20,933.33 | ||
| Mei's Capital | $ 10,466.67 | ||
| (Being gain shared by partners in the income sharing ratio) | |||
| (c) | Payment of Liabilities at book value: | ||
| Accounts Payable | $ 245,500.00 | ||
| Cash | $ 245,500.00 | ||
| (being liabilities paid at their book value) | |||
| (d) | Distribution of cash: | ||
| Kendra's Capital | $ 124,400.00 | ||
| Cogley's Capital | $ 233,433.33 | ||
| Mei's Capital | $ 177,466.67 | ||
| Cash | $ 535,300.00 | ||
| (Being Cash distributed to partners) |
Working Note: The distribution of cash is calculated as follows:
| Kendra | Cogley | Mei | Total | |
| Cash | $ 180,800.00 | |||
| Add: Sale of Inventory | $ 600,000.00 | |||
| Less: Payment of Liabilities | $ (245,500.00) | |||
| Net Cash Available | $ 535,300.00 | |||
| Partner's Capital | $ 93,000.00 | $ 212,500.00 | $ 167,000.00 | $ 472,500.00 |
| Add: Gain on Sale (Shared in the Ratio 3:2:1) | $ 31,400.00 | $ 20,933.33 | $ 10,466.67 | $ 62,800.00 |
| Capital Balance/ (Deficit) | $ 124,400.00 | $ 233,433.33 | $ 177,466.67 | $ 535,300.00 |
| Distribution of Cash | $ 124,400.00 | $ 233,433.33 | $ 177,466.67 | $ 535,300.00 |
To determine
Requirement-2:
To prepare: Journal entries for liquidation of partnership when inventory is sold for $500,000
Expert Solution
Explanation of Solution
Journal entries for liquidation of partnership are as follows:
| S.No. | Accounts titles and Explanation | Debit | Credit |
| (a) | Sale of inventory: | ||
| Cash | $ 500,000.00 | ||
| Loss on Sale | $ 37,200.00 | ||
| Inventory | $ 537,200.00 | ||
| (Being inventory sold for cash) | |||
| (b) | Allocation of Gain or loss: | ||
| Kendra's Capital | $ 18,600.00 | ||
| Cogley's Capital | $ 12,400.00 | ||
| Mei's Capital | $ 6,200.00 | ||
| Loss on Sale | $ 37,200.00 | ||
| (Being loss shared by partners in the income sharing ratio) | |||
| (c) | Payment of Liabilities at book value: | ||
| Accounts Payable | $ 245,500.00 | ||
| Cash | $ 245,500.00 | ||
| (being liabilities paid at their book value) | |||
| (d) | Distribution of cash: | ||
| Kendra's Capital | $ 74,400.00 | ||
| Cogley's Capital | $ 200,100.00 | ||
| Mei's Capital | $ 160,800.00 | ||
| Cash | $ 435,300.00 | ||
| (Being Cash distributed to partners) |
Working Note: The distribution of cash is calculated as follows:
| Kendra | Cogley | Mei | Total | |
| Cash | $ 180,800.00 | |||
| Add: Sale of Inventory | $ 500,000.00 | |||
| Less: Payment of Liabilities | $ (245,500.00) | |||
| Net Cash Available | $ 435,300.00 | |||
| Partner's Capital | $ 93,000.00 | $ 212,500.00 | $ 167,000.00 | $ 472,500.00 |
| Less: Loss on Sale (Shared in the Ratio 3:2:1) | $ (18,600.00) | $ (12,400.00) | $ (6,200.00) | $ (37,200.00) |
| Capital Balance/ (Deficit) | $ 74,400.00 | $ 200,100.00 | $ 160,800.00 | $ 435,300.00 |
| Distribution of Cash | $ 74,400.00 | $ 200,100.00 | $ 160,800.00 | $ 435,300.00 |
To determine
Requirement-3:
To prepare: Journal entries for liquidation of partnership when inventory is sold for $320,000 and the partner with deficit bring it in cash
Expert Solution
Explanation of Solution
Journal entries for liquidation of partnership are as follows:
| S.No. | Accounts titles and Explanation | Debit | Credit |
| (a) | Sale of inventory: | ||
| Cash | $ 320,000.00 | ||
| Loss on Sale | $ 217,200.00 | ||
| Inventory | $ 537,200.00 | ||
| (Being inventory sold for cash) | |||
| (b) | Allocation of Gain or loss: | ||
| Kendra's Capital | $ 108,600.00 | ||
| Cogley's Capital | $ 72,400.00 | ||
| Mei's Capital | $ 36,200.00 | ||
| Loss on Sale | $ 217,200.00 | ||
| (Being loss shared by partners in the income sharing ratio) | |||
| (c) | Payment of Liabilities at book value: | ||
| Accounts Payable | $ 245,500.00 | ||
| Cash | $ 245,500.00 | ||
| (being liabilities paid at their book value) | |||
| (d) | Distribution of cash: | ||
| Cogley's Capital | $ 140,100.00 | ||
| Mei's Capital | $ 130,800.00 | ||
| Kendra's Capital | $ 15,600.00 | ||
| Cash | $ 255,300.00 | ||
| (Being Cash distributed to partners) |
Working Note: The distribution of cash is calculated as follows:
| Kendra | Cogley | Mei | Total | |
| Cash | $ 180,800.00 | |||
| Add: Sale of Inventory | $ 320,000.00 | |||
| Less: Payment of Liabilities | $ (245,500.00) | |||
| Net Cash Available | $ 255,300.00 | |||
| Partner's Capital | $ 93,000.00 | $ 212,500.00 | $ 167,000.00 | $ 472,500.00 |
| Less: Loss on Sale (Shared in the Ratio 3:2:1) | $ (108,600.00) | $ (72,400.00) | $ (36,200.00) | $ (217,200.00) |
| Capital Balance/ (Deficit) | $ (15,600.00) | $ 140,100.00 | $ 130,800.00 | $ 255,300.00 |
| Distribution of Cash | $ (15,600.00) | $ 140,100.00 | $ 130,800.00 | $ 255,300.00 |
To determine
Requirement-4:
To prepare: Journal entries for liquidation of partnership when inventory is sold for $320,000 and the partner with deficit bring it in cash
Expert Solution
Explanation of Solution
Journal entries for liquidation of partnership are as follows:
| S.No. | Accounts titles and Explanation | Debit | Credit |
| (a) | Sale of inventory: | ||
| Cash | $ 250,000.00 | ||
| Loss on Sale | $ 287,200.00 | ||
| Inventory | $ 537,200.00 | ||
| (Being inventory sold for cash) | |||
| (b) | Allocation of Gain or loss: | ||
| Kendra's Capital | $ 143,600.00 | ||
| Cogley's Capital | $ 95,733.33 | ||
| Mei's Capital | $ 47,866.67 | ||
| Loss on Sale | $ 287,200.00 | ||
| (Being loss shared by partners in the income sharing ratio) | |||
| (c) | Payment of Liabilities at book value: | ||
| Accounts Payable | $ 245,500.00 | ||
| Cash | $ 245,500.00 | ||
| (being liabilities paid at their book value) | |||
| (d) | Distribution of cash: | ||
| Cogley's Capital | $ 83,033.33 | ||
| Mei's Capital | $ 102,266.67 | ||
| Cash | $ 185,300.00 | ||
| (Being Cash distributed to partners) |
Working Note: The distribution of cash is calculated as follows:
| Kendra | Cogley | Mei | Total | |
| Cash | $ 180,800.00 | |||
| Add: Sale of Inventory | $ 250,000.00 | |||
| Less: Payment of Liabilities | $ (245,500.00) | |||
| Net Cash Available | $ 185,300.00 | |||
| Partner's Capital | $ 93,000.00 | $ 212,500.00 | $ 167,000.00 | $ 472,500.00 |
| Less: Loss on Sale (Shared in the Ratio 3:2:1) | $ (143,600.00) | $ (95,733.33) | $ (47,866.67) | $ (287,200.00) |
| Capital Balance/ (Deficit) | $ (50,600.00) | $ 116,766.67 | $ 119,133.33 | $ 185,300.00 |
| Sharing of Deficit pf Kendra's Capital (In the ratio 2:1) | $ 50,600.00 | $ (33,733.33) | $ (16,866.67) | |
| Distribution of Cash | $ - | $ 83,033.33 | $ 102,266.67 | $ 185,300.00 |
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Chapter 12 Solutions
FUNDAMENTAL ACCT PRIN TEXT+CONNECT CODE
Ch. 12 - Prob. 1DQCh. 12 - Prob. 2DQCh. 12 - Prob. 3DQCh. 12 - Prob. 4DQCh. 12 - Prob. 5DQCh. 12 - Prob. 6DQCh. 12 - Prob. 7DQCh. 12 - Prob. 8DQCh. 12 - Prob. 9DQCh. 12 - Prob. 10DQ
Ch. 12 - Prob. 11DQCh. 12 - Prob. 12DQCh. 12 - Prob. 1QSCh. 12 - Prob. 2QSCh. 12 - Prob. 3QSCh. 12 - Prob. 4QSCh. 12 - Prob. 5QSCh. 12 - Prob. 6QSCh. 12 - Prob. 7QSCh. 12 - Prob. 8QSCh. 12 - Prob. 1ECh. 12 - Prob. 2ECh. 12 - Prob. 3ECh. 12 - Prob. 4ECh. 12 - Prob. 5ECh. 12 - Prob. 6ECh. 12 - Prob. 7ECh. 12 - Prob. 8ECh. 12 - Prob. 9ECh. 12 - Prob. 10ECh. 12 - Prob. 11ECh. 12 - Prob. 12ECh. 12 - Prob. 1APSACh. 12 - Prob. 2APSACh. 12 - Prob. 3APSACh. 12 - Prob. 4APSACh. 12 - Prob. 5APSACh. 12 - Prob. 1BPSBCh. 12 - Prob. 2BPSBCh. 12 - Prob. 3BPSBCh. 12 - Prob. 4BPSBCh. 12 - Prob. 5BPSBCh. 12 - Prob. 12SPCh. 12 - Prob. 1BTNCh. 12 - Prob. 2BTNCh. 12 - Prob. 3BTNCh. 12 - Prob. 4BTNCh. 12 - Access the January 14, 2014, filing of the 2013...Ch. 12 - Prob. 6BTNCh. 12 - Prob. 7BTNCh. 12 - Prob. 8BTN
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