The partners in Newman Company decide to liquidate the firm when the balance sheet shows the following.

The partners share income and loss 5:3:2. During the process of liquidation, the transactions below were completed in the following sequence.
1. A total of $55,000 was received from converting noncash assets into cash.
2. Gain or loss on realization was allocated to partners.
3. Liabilities were paid in full.
4. Cash was paid to the partners with credit balances.

Instructions
(a) Prepare a schedule of cash payments.
(b) Prepare the entries to record the transactions.
(c) Post to the cash and capitalaccounts.

Transcribed Image Text:

NEWMAN COMPANY Balance Sheet April 30, 2014 Assets Liabilities and Owners' Equity Cash Accounts receivable Allowance for doubtful accounts Inventory Equipment Accumulated depreciation-equipment 30,000 Notes payable 25,000 Accounts payable (2,000) 35,000 Mallory, capital 20,000 Bosco, capital (8,000) 20,000 30,000 2,500 28,000 13,650 5,850 100,000 Salaries and wages payable Renteria, capital $100,000