Answer:
Partnership of William Gerloff, Joshua Chu, and Courtney Jewett
1. Statement of Partnership Liquidation
William Gerloff Joshua Chu Courtney Jewett
Capital accounts $19,520 $4,080 $22,180
Share of loss (9,960) (4,980) (4,980)
Capital balances $9,560 (900) $17,200
Cash receipt 900
Payment of cash (9,560) $0 (17,200)
Balance 0 0 0
Cash balance:
Cash on February 3, 2016 = $4,880
Sale of non-cash assets = 36,020
Total cash balance = $40,920
Payment to creditors (15,040)
Cash deficiency receipt 900
Cash balance $26,780
2. Journal Entries:
Debit Capital accounts:
Gerloff $600
Jewett $300
Credit Chu $900
To allocate the Chu's capital deficiency to the two partners.
Debit Capital accounts:
Gerloff $8,660
Chu $16,900
Credit Cash $25,560
To distribute the remaining cash.
Explanation:
a) Data and Calculations:
Capital account balances:
William Gerloff $19,520
Joshua Chu $4,080
Courtney Jewett $22,180
Cash = $4,880
Non-cash assets $55,940
Creditors = $15,040
Income and losses sharing ratio = 2:1:1
Sale of non-cash assets = $36,020
Loss from the sale = 19,920
Statement of Partnership Liquidation (With Chu declaring bankruptcy):
William Gerloff Joshua Chu Courtney Jewett
Capital accounts $19,520 $4,080 $22,180
Share of loss (9,960) (4,980) (4,980)
Capital balances $9,560 (900) $17,200
Allocation of deficiency (600) 900 (300)
Payment of cash (8,960) $0 (16,900)
Balance 0 0 0
