Fundamental Accounting Principles
23rd Edition
ISBN: 9781259536359
Author: John J Wild, Ken Shaw Accounting Professor, Barbara Chiappetta Fundamental Accounting Principles
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 12, Problem 6APSA
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 |
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Deluxe Auto Parts holds inventory all over the world. Assume that the
records for one auto part show the following:
Beginning inventory
Net purchases
$2,20,000
8,00,000
Net sales
11,00,000
Gross profit rate
45%
Suppose this inventory, stored in the United States, was lost in a fire.
Estimate the amount of the loss to Deluxe Auto Parts. Use the gross
profit method.
Need help with this question solution general accounting
Do fast answer of this accounting questions
Chapter 12 Solutions
Fundamental Accounting Principles
Ch. 12 - Prob. 1DQCh. 12 - Prob. 2DQCh. 12 - Prob. 3DQCh. 12 - Prob. 4DQCh. 12 - Prob. 5DQCh. 12 - Prob. 6DQCh. 12 - Prob. 7DQCh. 12 - Prob. 8DQCh. 12 - Prob. 9DQCh. 12 - Prob. 10DQ
Ch. 12 - Prob. 11DQCh. 12 - Prob. 12DQCh. 12 - Prob. 1QSCh. 12 - Prob. 2QSCh. 12 - Prob. 3QSCh. 12 - Prob. 4QSCh. 12 - Prob. 5QSCh. 12 - Prob. 6QSCh. 12 - Prob. 7QSCh. 12 - Prob. 8QSCh. 12 - Prob. 9QSCh. 12 - Prob. 10QSCh. 12 - Prob. 1ECh. 12 - Prob. 2ECh. 12 - Prob. 3ECh. 12 - Prob. 4ECh. 12 - Prob. 5ECh. 12 - Prob. 6ECh. 12 - Prob. 7ECh. 12 - Prob. 8ECh. 12 - Prob. 9ECh. 12 - Prob. 10ECh. 12 - Prob. 11ECh. 12 - Prob. 12ECh. 12 - Prob. 13ECh. 12 - Prob. 1APSACh. 12 - Prob. 2APSACh. 12 - Prob. 3APSACh. 12 - Prob. 4APSACh. 12 - Prob. 5APSACh. 12 - Prob. 6APSACh. 12 - Prob. 1BPSBCh. 12 - Prob. 2BPSBCh. 12 - Prob. 3BPSBCh. 12 - Prob. 4BPSBCh. 12 - Prob. 5BPSBCh. 12 - Prob. 6BPSBCh. 12 - Prob. 12SPCh. 12 - Prob. 1BTNCh. 12 - Prob. 2BTNCh. 12 - Prob. 3BTNCh. 12 - Prob. 4BTNCh. 12 - Prob. 5BTNCh. 12 - Prob. 6BTNCh. 12 - Prob. 7BTNCh. 12 - Prob. 8BTN
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- cost of goods sold from 2019to2021?arrow_forwardSauerbraten Corp. reported 2007 sales ($ in millions) of $2,157 and a cost of goods sold of $1,827. The company uses the LIFO method for inventory valuation. It discloses that if the FIFO inventory valuation method had been used, inventories would have been $63.3 million and $56.8 million higher in 2007 and 2006, respectively. If Sauerbraten used the FIFO method exclusively, it would have reported 2007 gross profit closest to? a. $324. b. $330. c. $337.arrow_forwardVanguard Enterprises prepared its financial statements for 2020 based on the information below. The company had cash of $2,300, inventory of $19,400, and accounts receivables of $8,100. The company's net fixed assets were $55,000, and other assets were $4,500. It had accounts payable of $13,700, notes payable of $5,500, common stock of $30,000, and retained earnings of $17,200. How much long-term debt did the firm have?arrow_forward
- General accounting questionarrow_forwardhi expert please help mearrow_forwardStandard Quantity Puvo, Inc., manufactures a single product in which variable manufacturing overhead is assigned on the basis of standard direct labor-hours. The company uses a standard cost system and has established the following standards for one unit of product: Standard Price or Rate Standard Cost Direct materials 5.90 pounds $0.70 per pound $4.13 Direct labor 0.50 hours $34.50 per hour $ 17.25 Variable manufacturing 0.50 hours $8.60 per hour $ 4.30 overhead During March, the following activity was recorded by the company: -The company produced 2,500 units during the month. -A total of 19,500 pounds of material were purchased at a cost of $13,680. -There was no beginning inventory of materials on hand to start the month; at the end of the month, 3,720 pounds of material remained in the warehouse. -During March, 1,100 direct labor-hours were worked at a rate of $31.50 per hour. -Variable manufacturing overhead costs during March totaled $14,161. -The direct materials purchases…arrow_forward
- accountarrow_forwardInformation for Southgate Company's direct labor costs for the month of March 2021 was as follows: Actual direct labor hours: 42,000 hours Standard direct labor hours: 40,000 hours Total direct labor payroll: $315,000 Direct labor efficiency variance: unfavorable $5,000 What is Southgate's direct labor price (or rate) variance?arrow_forwardwhat is Sophia's return on equity?arrow_forward
- Hi expert please give me answer general accounting questionarrow_forwardI want to correct answer general accounting questionarrow_forwardOn January 1, Silverstone Co. issues bonds with a face value of $400,000 and an interest rate of 8%, payable semi-annually. What is the amount of interest expense on July 1?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
What is liquidity?; Author: The Finance Storyteller;https://www.youtube.com/watch?v=XtjS7CfUSsA;License: Standard Youtube License