1. Introduction: Liquidation of partnership -Under liquidation of partnership, surplus realized after selling of assets is netted off with the losses and payment of liabilities. After all distribution, net surplus is distributed amongst partners in their profit/loss sharing ratio. To determine: Computation of the capital balance of each partner after liquidation of assets and the payment of creditors. F: $(3,750), B: $30,000 and S: $18,750. Computation of Capital balance of each partner after liquidation: Total loss = Total Capital − Cash after payment to creditors = $ ( 131 , 250 + 165 , 000 + 153 , 000 ) − $ 45 , 000 = $ 405 , 000 Loss to be shared equally = $ 405 , 000 3 = $ 135 , 000 Particulars F($) B ($) S ($) Capital balance 131,250 165,000 153,750 Less: Loss (135,000) (135,000) (135,000) Capital balance after liquidation (3,750) 30,000 18,750 2. Introduction: Liquidation of partnership: Under liquidation of partnership, surplus realized after selling of assets is netted off with the losses and payment of liabilities. After all distribution, net surplus is distributed amongst partners in their profit/loss sharing ratio. To determine: Journal entries for (a) cash receipt from the deficient partner and (b) final disbursement to partners. (a) Cash Account Dr. $3,750 To F’s Capital Account $3,750 (Being amount of deficit in F’s Capital account received ) (b) B’s Capital Account Dr. $30,000 S’s Capital Account Dr. $18,750 To Cash $48,750 (Being surplus cash distributed to B and S) Working for Journal entries: Cash to be bring in by F = Deficit is capital account = $3,750 (calculated in point 1 above.) Amount of cash to be disbursed: Total cash = $ 45 , 000 + $ 3 , 750 = $ 48 , 750 Cash to be disbursed = Surplus balance in capital accounts F = ( 3750 ) + 3750 = $ Nil B = $ 30 , 000 S = $ 18 , 750 3. Introduction: Liquidation of partnership: Under liquidation of partnership, surplus realized after selling of assets is netted off with the losses and payment of liabilities. After all distribution, net surplus is distributed amongst partners in their profit/loss sharing ratio. To determine: Journal entries for (a) transfer of deficit to other partners and (b) final disbursement to partners. (a) B’s Capital Account Dr. $1,875 S’s Capital Account Dr. $1,875 To F’s Capital Account $3,750 (Being deficit in F account transferred to B and S accounts) (b) B’s Capital Account Dr. $28,125 S’s Capital Account Dr. $16,875 To Cash $45,000 (Being surplus cash distributed to B and S) Working for Journal entries: Since, partners are equal partners, deficit of F to be shared equally amongst the B and S. Hence, 3750/2 i.e. $1,875 to be shared by B and S each. Amount of cash to be disbursed: Total cash = $45,000 Cash to be disbursed = Surplus balance in capital accounts F = ( 3750 ) + 3750 = $ N i l B = $ ( 30 , 000 − 1 , 875 ) = $ 28 , 125 S = $ ( 18 , 750 − 1 , 875 ) = $ 16 , 875

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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