Question

JIS (U) $200,000 $145,000, and (c) $262,000. (2c) Cr. Benson, Capital, $9,300 Kendra, Cogley, and Mei share income and loss in a 3:2:1 ratio (in ratio form: Kendra, %: Cogley, and Mei..). The partners have decided to liquidate their partnership. On the day of liquidation, their balance sheet appears as follows. Problem 12-6A Liquidation of a partnership P5 Balance Sheet Assets Cash ... $180,800 537,200 $245,500 Inventory ............ Liabilities Accounts payable Equity Kendra, Capital .......... Cogley, Capital .......... Mei, Capital............ Total liabilities and equity ........... 93,000 212,500 167.000 $718,000 Total assets .......... $718,000 Required Prepare journal entries for (a) the sale of inventory, (b) the allocation of its gain or loss, (c) the payment of liabilities at book value, and (d) the distribution of cash in each of the following separate cases: Inventory is sold for (1) $600,000; (2) $500,000; (3) $320,000 and partners with deficits pay their deficits in cash: and (4) $250,000 and partners with deficits do not pay their deficits. (Round to the nearest dollar. Check (4) Cash distribution: Mel $102.266

Answer 1

1. Journal Entries if inventory is sold for $ 600,000

Transaction	Journal Entry	Debit	Credit
a.	CashA/c Dr	$600,000
	To Inventory A/c		$600,000
	(Being the inventory is sold)
b.	P&L A/c Dr	$62,800
	To Kendra Capital A/c		$ 31,400
	To Cogley Capital A/c		$ 20,933
	To Mei Capital A/c		$ 10,467
	(Being the gain on sale of inventory transferred to Capital Accounts)
c.	Accounts Payable A/c Dr	$245,500
	To Cash A/c		$ 245,500
	(being the Accounts payable paid)
d.	Kendra A/c Dr	$267,650
	Cogley A/c Dr	$178,433
	Mei A/c Dr	$89,217
	To Cash A/c		$535,300
	(Being the excess cash distributed to the partners)

2. Journal Entries if inventory is sold for $ 500,000

Transaction	Journal Entry	Debit	Credit
a.	CashA/c Dr	$500,000
	To Inventory A/c		$500,000
	(Being the inventory is sold)
b.	Kendra Capital A/c	$ 18,600
	Cogley Capital A/c	$12,400
	Mei Capital A/c	$6,200
	To P&L A/c		$ 37,200
	(Being the Loss on sale of inventory transferred to Capital Accounts)
c.	Accounts Payable A/c Dr	$245,500
	To Cash A/c		$ 245,500
	(being the Accounts payable paid)
d.	Kendra A/c Dr	$217,650
	Cogley A/c Dr	$145,100
	Mei A/c Dr	$72,550
	To Cash A/c		$435,300
	(Being the excess cash distributed to the partners)

3. Journal Entries if inventory is sold for $ 320,000

Transaction	Journal Entry	Debit	Credit
a.	CashA/c Dr	$320,000
	To Inventory A/c		$320,000
	(Being the inventory is sold)
b.	Kendra Capital A/c	$ 108,600
	Cogley Capital A/c	$72,400
	Mei Capital A/c	$ 36,200
	To P&L A/c		$ 217,200
	(Being the Loss on sale of inventory transferred to Capital Accounts)
c.	Accounts Payable A/c Dr	$245,500
	To Cash A/c		$ 245,500
	(being the Accounts payable paid)
d.	Kendra A/c Dr	$127,650
	Cogley A/c Dr	$85,100
	Mei A/c Dr	$42,550
	To Cash A/c		$255,300
	(Being the excess cash distributed to the partners)

4.Journal Entries if inventory is sold for $ 250,000

Transaction	Journal Entry	Debit	Credit
a.	CashA/c Dr	$250,000
	To Inventory A/c		$250,000
	(Being the inventory is sold)
b.	Kendra Capital A/c	$ 143,600
	Cogley Capital A/c	$,95,733
	Mei Capital A/c	$ 47,867
	To P&L A/c		$ 287,200
	(Being the Loss on sale of inventory transferred to Capital Accounts)
c.	Accounts Payable A/c Dr	$245,500
	To Cash A/c		$ 245,500
	(being the Accounts payable paid)
d.	Kendra A/c Dr	$56,650
	Cogley A/c Dr	$ 37,767
	Mei A/c Dr	$18,883
	To Cash A/c		$113,300
	(Being the excess cash distributed to the partners)

In all the above cases there is no deficit cash and therefore partners need not to pay for their deficits.