Question

After closing the accounts on July 1, prior to liquidating the partnership, the capital account balances of Gold, Porter, and Sims are $55,000, $45,000, and $20,000, respectively. Cash, noncash assets, and liabilities total $56,000, $96,000, and $32,000, respectively. Between July 1 and July 29, the noncash assets are sold for $90,000, the liabilities are paid, and the remaining cash is distributed to the partners. The partners share net income and loss in the ratio of 3:2:1.Prepare a statement of partnership liquidation for the period July 1-29. Enter any subtractions (balance deficiencies, payments, cash distributions, divisions of loss, sale of assets) as negative numbers using a minus sign. If an amount is zero, enter in "0".

Answer 1

:Answer:

Please find the attached pictures for the answer.

Explanation:

Explanation for each line in the picture:

Balance before liquidation is given as:

+ Total Asset = Cash + Non-cash = 56K + 96K = 152K

+ Total funding = Liabilities + Owner Equity of 03 contributors in the partnership = 32K + 55K + 45K + 20K = 152K

After the sold of non-cash asset:

+ Loss of $6,000 (90,000 - 96,000) is realized and distributed with the ratio of 3:2:1 to contributors. Thus, Gold's capital is $52,000 after deducting $3,000 loss; Porter's capital is $43,000 after deducting $2,000 loss and Sim's Capital is $19,000 after deducting $1,000 loss/

+ Cash account rose by $90,000 due to cash'receipt from sales of non-cash asset, up to 146,000.

Settlement of liabilties:

As liabilities worth $32,000; the full settlement will deduct liabilites by $32,000 and decrease cash account by the same amount.

In the end, there is $114,000 to be distributed to Gold: $52,000; Porter: $43,000 and Sim: $19,000