Danks, Vickerman and Walter are liquidating their partnership. Before selling the assets and paying the liabilities,...
Danks, Vickerman and Walter are liquidating their partnership. Before selling the assets and paying the liabilities, the capital balances areDanks $46,000;Vickerman,$29,000; and Walter,$21,000.The profit-and-loss-sharing ratio has been 2:2:1 for Danks,Vickerman,and Walter, respectively. The partnership has $76,000 cash,$42,000 non-cash assets, and $22,000accounts payable.
Requirement 1. Assuming the partnership sells the non-cash assets for $52,000, record the journal entries for the sale of non-cash assets, allocation of gain or loss onliquidation, the payment of the outstanding liabilities, and the distribution of remaining cash to partners. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)Journalize the sale of the non-cash assets for $52,000.
Requirement 2. Assuming the partnership sells the non-cash assets for $10,000 record the journal entries for the sale of non-cash assets, allocation of gain or loss on liquidation, the payment of the outstanding liabilities, and the distribution of remaining cash to partners.
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Date |
Accounts and Explanation |
Debit |
Credit |
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Dec. 31 |
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and also,
Hu minus Kung minus LienHu−Kung−Lien Oriental Design is a partnership owned by three individuals. The partners share profits and losses in the ratio of 30% to Hu,40% to Kung, and 30% to Lien.At December 31,2018, the firm has the following balance sheet.
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Hu-Kung-Lien Oriental Design |
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Balance Sheet |
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December 31, 2018 |
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Assets |
Liabilities |
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Cash |
$19,000 |
Accounts Payable |
$73,000 |
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Accounts Receivable, Net |
13,000 |
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Merchandise Inventory |
92,000 |
Partners' Equity |
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Equipment, Net |
70,000 |
Hu, Capital |
29,000 |
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Kung, Capital |
44,000 |
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Lien, Capital |
48,000 |
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Total Partners' Equity |
121,000 |
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Total Assets |
$194,000 |
Total Liabilities and Partners' Equity |
$194,000 |
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On December 31, Hu withdraws from the partnership.
Requirement 1. In a personal transaction,Hu sells her equity to Wong, who pays Hu $130,000for her interest. Kungand Lien agree to accept Wong as a partner. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)
| The partnership paysHuHu cash of $20,000 and gives her a note payable for the remainder of her book equity in settlement of her partnership interest. | |
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3. |
The partnership paysHuHu$75,000 for her book equity. |
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4. |
The partnership pays HuHu $9,000 for her book equity. |
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Danks, Vickerman and Walter are liquidating their partnership.
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