Poppy, Sweetbean, and Olive, who have always shared incomes and losses in a 3:1:1 ratio, plan to liquidate their partnership. Just prior to the liquidation their balance sheet appeared as follows:
Required Part 1 Under the assumption that the equipment is sold and the cash is distributed to the proper parties on October 15, 2014, complete the schedule provided below.
Show the sale, the gain or loss allocation, and the distribution of the cash in each of the following unrelated cases: a. The equipment is sold for $189,000. b. The equipment is sold for $119,070. c. The equipment is sold for $50,820, and any partners with resulting deficits can and do pay in the amount of their deficits. d. The equipment is sold for $38,640, and the partners have no assets other than those invested in the business.
Part 2 Prepare the entry to record the final distribution of cash assuming case (a)above.