Josh, John, and Hassan are partners in a retail lighting store. They share income and losses in the ratio of 2:2:1, respectively. The partners have agreed to liquidate the partnership. The partnership balance sheet before the liquidation follows.

The other assets were sold on September 1, 2014, for $720,000. Accounts payable were paid on September 4, 2014. The remaining cash was distributed to the partners on September 11, 2014.

Required
1. Prepare a statement of liquidation.
2. Prepare the following journal entries:
a. The sale of the other assets.
b. Payment of the accounts payable.
c. The distribution of the loss from realization.
d. The distribution to the partners of the remainingcash.

Transcribed Image Text:

Josh, John, and Hassan Partnership Balance Sheet August 31,2014 Assets Liabilities Cash Other assets 280,000 880,000 Accounts payable S 360,000 Partners'Equity Josh, capital John, capital Hassan, capital Total partners equity Total liabilities and partners equity 400,000 240,000 160,000 S 800,000 $1,160,000 Total assets $1,160,000