Question

Pr 12-5a statement of liquidations

OBJ.4 PR 12-5A Statement of partnership liquidation 1d Gerloff $8,500 After the accounts are closed on February 3, prior to liquidating the partnershi capital accounts of William Gerloff, Joshua Chu, and Courtney Jewett are $19,300, $4,500 and $22.300, respectively. Cash and noncash assets total $5,200 and $55,900, respectively Amounts owed to creditors total $15,000. The partners share income and losses in the ratio of 2:1:1. Between February 3 and February 28, the noncash assets are sold for $34,300, the partner with the capital deficiency pays the deficiency to the partnership, and the liabilities are paid Excel

Answer 1

1.

	Statement of Partnership Liquidation
	For the Period February 3 to 28
					Partners
		Cash	Noncash Assets	Liabilities	W. Gerloff	J. Chu	C. Jewett
	Balances, February 3	5200	55900	15000	19300	4500	22300
(a)	Sale of assets and division of loss	34300	-55900		-10800	-5400	-5400
	Balances	39500	0	15000	8500	-900	16900
(b)	Payment of liabilities	-15000		-15000
	Balances	24500	0	0	8500	-900	16900
(c)	Receipt of deficiency from J. Chu	900			0	900	0
	Balances	25400	0	0	8500	0	16900
(d)	Distribution of cash	-25400			-8500	0	-16900
	Final balances	0	0	0	0	0	0

Notes:

i. The loss on sale of noncash assets $21600 ($34300 - $55900) is borne by the partners in the income and loss sharing ratio of 2:1:1.

ii. The remaining cash balance is distributed to the partners in their capital ratio after allocation of all losses.

2.

2	General Journal	Debit	Credit
(a)	W. Gerloff, capital ($900 x 2/3)	600
	C. Jewett, capital ($900 x 1/3)	300
	J. Chu, capital		900
	(To record allocation of J. Chu's deficiency)
(b)	W. Gerloff, capital	7900
	C. Jewett, capital	16600
	Cash		24500
	(To record distribution of remaining cash)

Note: The deficiency of the bankrupt partner is borne by the solvent partners in their income and loss sharing ratio of 2:1.