Question

The Discount Partnership is being liquidated. The current balance sheet is shown here.
Discount Partnership
Balance Sheet
January 14, 2008
Assets .
Cash .............. $ 25,000
Other assets ............. 120,000
Total assets ............ $145,000
Liabilities and Partners’ Equity
Accounts payable ......... $ 40,000
Dawson, capital ........... 31,000
Feeney, capital ........... 65,000
Hardin, capital ............ 9,000
Total liabilities and partners’ equity .. $145,000

Dawson, Feeney, and Hardin share profits and losses in a 30:40:30 ratio.

Required:
A. Prepare a schedule of partnership liquidation for each of the following three independent cases.
(1) The noncash assets are sold for $60,000, and any partner with a deficit is unable to eliminate any of the deficit.
(2) The noncash assets are sold for $60,000, and any partner with a deficit is able to invest cash equal to the amount of the deficit.
(3) The noncash assets are sold for $50,000, and any partner with a deficit is able to invest up to $8,000 cash in the partnership.
B. Prepare all necessary journal entries for case 2 above.



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  • CreatedMarch 16, 2015
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