Partnership : It is an organization in which two or more person join together to do a business in which they all share profit and losses in an agreed ratio. One or more partners are acting in behalf of all partners. Each partner is responsible for the act of firm. Requirement-1: To Give: Journal entries of adjustments. Particulars Amount Cash 650000 Equipment 617200 Profit and Loss 32800 (Being equipment sold.) Profit and loss 32800 Partner 1 13120 Partner 2 6560 Partner 3 13120 (Being Profit distributed.) Accounts Payable 342600 Cash 342600 (Being liability paid at book value.) Partner 1 313520 Partner 2 202360 Partner 3 140120 Cash 656000 (Being cash distributed in partners.) Calculation of cash distribution Sale of equipment (A) 650000 Book value of equipment 617200 Profit on sale 32800 Cash balance (B) 348600 Total Cash (A+B)= C 998600 Liability (D) 342600 Cash balance after liability 656000 Partner 1 Partner 2 Partner 3 Opening Balance 300400 195800 127000 Add: Profit (2:1:2) 13120 6560 13120 Total Cash received 313520 202360 140120 Concept Introduction: Partnership: It is an organization in which two or more person join together to do a business in which they all share profit and losses in an agreed ratio. One or more partners are acting in behalf of all partners. Each partner is responsible for the act of firm. Requirement-2: To Give: Journal entries of adjustments. Particulars Amount Cash 530000 Profit and loss 87200 Equipment 617200 (Being equipment sold.) Partner 1 34880 Partner 2 17440 Partner 3 34880 Profit and loss 87200 (Being Loss distributed.) Accounts Payable 342600 Cash 342600 (Being liability paid at book value.) Partner 1 265520 Partner 2 178360 Partner 3 92120 Cash 536000 (Being cash distributed in partners.) Calculation of cash distribution Sale of equipment (A) 530000 Book value of equipment 617200 Loss on sale -87200 Cash balance (B) 348600 Total Cash (A+B)= C 878600 Liability (D) 342600 Cash balance after liability 536000 Partner 1 Partner 2 Partner 3 Opening Balance 300400 195800 127000 Less: Loss (2:1:2) -34880 -17440 -34880 Total Cash received 265520 178360 92120 Concept Introduction: Partnership: It is an organization in which two or more person join together to do a business in which they all share profit and losses in an agreed ratio. One or more partners are acting in behalf of all partners. Each partner is responsible for the act of firm. Requirement-3: To Give: Journal entries of adjustments. Case 3 Particulars Amount Cash 200000 Profit and loss 417200 Equipment 617200 (Being equipment sold.) Partner 1 166880 Partner 2 83440 Partner 3 166880 Profit and loss 417200 (Being Profit distributed.) Accounts Payable 342600 Cash 342600 (Being liability paid at book value.) Partner 1 106933 Partner 2 99067 Cash 206000 (Being cash distributed in partners.) Calculation of cash distribution Sale of equipment (A) 200000 Book value of equipment 617200 Loss on sale -417200 Cash balance (B) 348600 Total Cash (A+B)= C 548600 Liability (D) 342600 Cash balance after liability 206000 Partner 1 Partner 2 Partner 3 Opening Balance 300400 195800 127000 Less: Loss (2:1:2) -166880 -83440 -166880 Gross Cash received 133520 112360 -39880 Less: Loss adjusted of partner 3 -26587 -13293 39880 Net amount received 106933 99067 0 Concept Introduction: Partnership: It is an organization in which two or more person join together to do a business in which they all share profit and losses in an agreed ratio. One or more partners are acting in behalf of all partners. Each partner is responsible for the act of firm. Requirement-4: To Give: Journal entries of adjustments. Particulars Amount Cash 150000 Profit and loss 467200 Equipment 617200 (Being equipment sold.) Partner 1 186880 Partner 2 93440 Partner 3 186880 Profit and loss 467200 (Being Profit distributed.) Accounts Payable 342600 Cash 342600 (Being liability paid at book value.) Partner 1 73600 Partner 2 82400 Cash 156000 (Being cash distributed in partners.) Calculation of cash distribution Sale of equipment (A) 150000 Book value of equipment 617200 Loss on sale -467200 Cash balance (B) 348600 Total Cash (A+B)= C 498600 Liability (D) 342600 Cash balance after liability 156000 Partner 1 Partner 2 Partner 3 Opening Balance 300400 195800 127000 Less: Loss (2:1:2) -186880 -93440 -186880 Gross Cash received 113520 102360 -59880 Less: Loss adjusted of partner 3 -39920 -19960 39880 Net amount received 73600 82400 -20000

Connect Access Card for Financial Accounting: Information and Decisions

8th Edition

ISBN: 9781259662966

Author: John J Wild

Publisher: McGraw-Hill Education

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Solution Summary: The author explains that partnership is an organization in which two or more person join together to do a business and share profit and losses in an agreed ratio.

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