Question

The partners in Crane Company decide to liquidate the firm when the balance sheet shows the following Crane Company Balance Sheet May 31, 2020 Assets Cash Accounts receivable Allowance for doubtful accounts Liabilities and Owners' Equity $30.000 Notes payable $13.700 24.200 Accounts payable 27.200 (1.200) Salaries and wages payable 4,000 34,600 A Jamison, capital 32,600 21,200 S. Mayer, capital 23,100 (5.2001 P. Roper, capital 3.000 $103,600 $103,600 Inventory Equipment Accumulated depreciation-equipment The partners share income and loss 5:32. During the process of liquidation, the following transactions were completed in the following sequence A total of 550.600 was received from converting noncash assets into cash Gain or loss on realization was allocated to partners. Liabilities were paid in full. P. Roper paid his capital deñciency Cash was paid to the pertners with credit balances.

entries to record the transactions

Answer 1

1. The gain or loss on realization of all non cash assets would be the balancing figure in the journal entry, All the asset accounts would have to be closed and hence the entry would be passed to make the balance of all assets accounts zero except for cash account. (Refer entry below).

2. Gain or loss on realization would be allocated to partners in the income ratio of 5:3:2 (refer entry below)

3. All liabilities would be paid in cash except for the partner accounts. Thus all liabilities would be reversed to make the balance of all liability accounts zero except for partner accounts (Refer entry below)

4. Roper's deficit would be $1,600 (4,600 loss on realization Less 3,000 credit balance)

5. Cash paid to other partners, A.Jamison = $21,100 (32,600 Less loss of 11,500) and S.Moyer = $16,200 (23,100 less loss of 6,900)

The journal entries are below:-

Sl No	Ledger Name		Debit	Credit
1	Cash a/c	dr	$50,600
	Allowance for doubtful accounts a/c	dr	$1,200
	Accumulated depreciation-Equipment a/c	dr	$5,200
	Realization a/c [Balancing Figure]	dr	$23,000
	To Accounts receivable a/c			($24,200)
	To Inventory a/c			($34,600)
	To Equipment a/c			($21,200)
	(Being cash of $50,600 realized)
2	A.Jamison Capital a/c	dr	$11,500
	S.Moyer Capital a/c	dr	$6,900
	P.Roper Capital a/c	dr	$4,600
	To Realization a/c			($23,000)
	(Loss on realization allocated to partners)
3	Notes Payable a/c	dr	$13,700
	Accounts Payable a/c	dr	$27,200
	Salaries and wages payable a/c	dr	$4,000
	To Cash a/c			($44,900)
	(Being liabilities settled)
4	Cash a/c	dr	$1,600
	To P.Roper Capital a/c			($1,600)
	(Being P.Roper paid deficit)
5	A.Jamison Capital a/c		$21,100
	S.Moyer Capital a/c		$16,200
	To Cash a/c			($37,300)
	(Balance partner's paid cash)