On November 1.2016 , the firm of Sails, Welch, and Greenberg decided to liquidate their partnership. The partners have capital balances of $58,000, $72,000, and $10,000, respectively. The cash balance is $32,000, the book values of noncash asset total $128,000, and liabilities total $20,000. The partners share income and losses in the ratio of 2:2:1.
Instructions:
1. Prepare a statement of partnership liquidation, covering the period November 1-30, 2016, for each of the following independent assumptions:
a. All of the noncash assets are sold for $156,000 in cash, the creditors are paid and the remaining cash is distributed to the partners.
b. All of the noncash assets are sold for $55,000 in cash, the creditors are paid, the partner with the debit capital balance pays the amount owned to the firm, and the remaining cash is distributed to the partners.
2. Assume the partner with the capital deficiency in part (b) declares bankruptcy and is unable to pay the deficiency. Journalize the entries to (a) allocate the partner’s deficiency and (b) distribute the remaining cash.
PLEASE SHOW HOW ALL WORK IF ANY MATH IS INVOLVED.