Chapter 12, Problem P12.30APGA

Allocating profits and losses to the partners, accounting for withdrawal of a partner, accounting for the liquidation of a partnership, and preparing partnership financial statements

LOT is a partnership owned by Maggie Lafleur, Susan Olay, and Tara Thibert. The partners’ profit-and-loss-sharing agreement is 3:14, respectively. The adjusted trial balances of the partnership at November 30, 2016, follow:

LOT Adjusted Trial Balance November 30, 2016
	Balance
Account Title	Debit	Credit
Cash	$ 4,000
Merchandise Inventory	4,000
Building	235,000
Accumulated Depreciation-Building		$ 35,000
Accounts Payable		15,000
Mortgage Payable		75,000
Lafleur, Capital		50,000
Olay, Capital		65,000
Thibert, Capital		35,000
Lafleur, Withdrawals	9,000
Olay, Withdrawals	3,000
Thibert, Withdrawals	5,000
Sales Revenue		65,000
Cost of Goods Sold	38,000
Salaries Expense	26,000
Rent Expense	16,000

Total $ 340,000 $ 340,000

Requirements

1. Prepare statement of partners’ equity for the month ended November 30, 2016. Use a separate column for each partner in the statement of partners’ equity. Assume no new capital contributions during November.
2. Prepare the four closing entries for the month ended November 30, 2016.
3. Thibert decides to withdraw from the partnership on December 1, 2016. Her settlement includes all the Merchandise Inventory and all of the Cash in exchange for her equity interest in the partnership.
4. Immediately after Thibert’s withdrawal, Lafleur and Olay decide to liquidate the partnership. They sell the building for $172,000. Then they pay the liabilities and distribute the cash to complete the liquidation. Journalize these liquidation entries. Assume the profit-and-loss-sharing ratios remain the same.