Vonne, Kent, and Johnson plan to liquidate their partnership. They have always shared losses and gains in a 1:4:5 ratios, and on the day of the liquidation their balance sheet appeared as follows:
Required Part 1 Under the assumption that the machinery is sold and the cash is distributed to the proper parties on June 30, 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 machinery is sold for $488,130. b. The machinery is sold for $375,000. c. The machinery is sold for $212,500, and any partners with resulting deficits can and do pay in the amount of their deficits. d. The machinery is sold for $187,500, 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.