EXERCISE 8-6. Journal Entries and Statement Preparation 2: With capital deficiency; solvent partner/s. The partners in...

 

Transcribed Image Text:

EXERCISE 8-6. Journal Entries and Statement Preparation 2: With capital deficiency; solvent partner/s. The partners in the law firm of Mega, Nega, and Pipa had strong differences of opinion concerning client acceptance policies that made them decide to liquidate the business on February 14, 2019. As of December 31, 2018, their capital balances were: Mega, $350,000; Nega, P100,000; and Pipa, P105,000. Liabilities, cash, and non-cash assets were P145,000, P40,000, and P660,000, respectively. Cash revenues and expenses for 2019 amounted to $77,000 and P115,000, respectively. Profits and losses are shared by Mega, Nega, and Pipa in the ratio of 5:3:2, respectively. REQUIRED: 1. Prepare journal entries to record liquidation under each of the following cases: 1. The non-cash assets were sold for P200,000. The deficient partner/s was/were solvent partner/s. 2. The non-cash assets were sold at a loss of P515,000. The deficient partner/s was/were solvent partner/s. 2. Prepare statement of liquidation for Item 1b. EXERCISE 8-6. Journal Entries and Statement Preparation 2: With capital deficiency; solvent partner/s. The partners in the law firm of Mega, Nega, and Pipa had strong differences of opinion concerning client acceptance policies that made them decide to liquidate the business on February 14, 2019. As of December 31, 2018, their capital balances were: Mega, $350,000; Nega, P100,000; and Pipa, P105,000. Liabilities, cash, and non-cash assets were P145,000, P40,000, and P660,000, respectively. Cash revenues and expenses for 2019 amounted to $77,000 and P115,000, respectively. Profits and losses are shared by Mega, Nega, and Pipa in the ratio of 5:3:2, respectively. REQUIRED: 1. Prepare journal entries to record liquidation under each of the following cases: 1. The non-cash assets were sold for P200,000. The deficient partner/s was/were solvent partner/s. 2. The non-cash assets were sold at a loss of P515,000. The deficient partner/s was/were solvent partner/s. 2. Prepare statement of liquidation for Item 1b.

Answer rating: 100% (QA)

STEP 1 STEP 2 STEP 3 JOURNAL ... View the full answer