On October 1, 2008, the firm of Allen, Dee, and Ito decided to liquidate their partnership. The

Question:

On October 1, 2008, the firm of Allen, Dee, and Ito decided to liquidate their partnership. The partners have capital balances of $55,000, $75,000, and $12,000, respectively. The cash balance is $13,000, the book values of noncash assets total $179,000, and liabilities total $50,000. The partners share income and losses in the ratio of 2:2:1.


Instructions

Prepare a statement of partnership liquidation, covering the period October 1 through October 30 for each of the following independent assumptions:

1. All of the noncash assets are sold for $224,000 in cash, the creditors are paid, and the remaining cash is distributed to the partners.

2. All of the noncash assets are sold for $109,000 in cash, the creditors are paid, the partner with the debit capital balance pays the amount owed to the firm, and the remaining cash is distributed to the partners.


Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...
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Accounting

ISBN: 978-0324401844

22nd Edition

Authors: Carl S. Warren, James M. Reeve, Jonathan E. Duchac

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