Question: Label each exercise or problem clearly. Use APA formatting and citation if needed. Sand, Mell, and Rand are partners who share incomes and losses in
Label each exercise or problem clearly. Use APA formatting and citation if needed.
Sand, Mell, and Rand are partners who share incomes and losses in a 1:4:5 ratio. After lengthy disagreements among the partners and several unprofitable periods, the partners decided to liquidate the partnership.
Before the liquidation, the partnership balance sheet showed the following:
Cash $10,000
Total “other assets,” $106,000
Total liabilities, $88,000
Sand, Capital, $1,200
Mell, Capital, $11,700
Rand, Capital, $15,100
The “other assets” were sold for $ 85,000. Proceeds from the sale of other assets were used to payoff existing liabilities.
Determine the following:
1. The gain (or loss) realized on the sale of the assets and recording of liabilities’ payment.
2. The balances in the partners’ capital accounts after the distribution of this gain or loss to the capital accounts.
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To solve this problem we need to address both parts of the liquidation process calculating the gain or loss from the sale of assets and reallocating t... View full answer
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