Razul and Amy decided to start a partnership called SA Consulting on January 1, 2020. Each of them contributed a number of items to the partnership, which are listed below. All tangible assets are listed at their market value.
									2020
										Razul			Amy
	Cash	$40,000		Cash		$60,000
	Equipment	190,000		Furniture		70,000
	Bank Loan	80,000		Accounts Payable		30,000
		$150,000				$100,000
On March 1, Razul and Amy added a new partner to the business, Sheila. Sheila will contribute $100,000 and receive a 35% share of the business. Use the capital balances from January 1 to determine any bonuses. Assume the existing partners will split any bonus evenly.
									100000	35	122500
									On December 31, 2020, Razul and Amy withdrew $20,000 and $15,000 respectively and during the year the business reported a net income of $400,000. Their partnership agreement provided for sharing of net income (loss) on the following basis:
1. Salary of $60,000 is allocated to Razul, $50,000 to Amy, and $20,000 to Sheila.
2. Interest is allocated at 7% of each partner's opening capital balance.
3. Remainder is shared where Razul gets 40%, Amy gets 25%, and Sheila gets 35%.

g) After divding the income for the year, all parties agreed to liquidate the partnership. The values of the assets and liabilities are shown below. The furniture is sold for $54,000 and all other assets are sold at their given values. Any gains or losses from liquidation are split evenly among all partners.
54,000
Cash		$482,000
Accounts Receivable		50,000
Net Equipment		247,000
Net Furniture		84,000
Accounts Payable		36,000
Bank Loan		112,000
Prepare the journal entries to sell the assets, distribute any gains or losses to the partners, pay the liabilities and distribute the cash to the partners.

Answer rating: 100% (QA)

a b d e f g Date Account Title 1Jan20 Cash 1Jan20 Cash Equipment Bank Loan Razul Capital Being recor... View the full answer