Statement of Partnership Liquidation
On October 1, 2014, the firm of Sams, Price, and Ladd decided to liquidate their partnership. The partners have capital balances of $49,000, $69,000, and $11,000, respectively. The cash balance is $16,000, the book values of noncash assets total $149,000, and liabilities total $36,000. The partners share income and losses in the ratio of 2:2:1.
Required:
1. Prepare a statement of partnership liquidation, covering the period October 1–30 2014, for each of the following independent assumptions:
a. All of the noncash assets are sold for $200,000 in cash, the creditors are paid, and the remaining cash is distributed to the partners. Enter any subtractions (balance deficiencies, payments, cash distributions, divisions of loss) as negative numbers using a minus sign. If there is no amount or an amount is zero, enter "0".
b. All of the noncash assets are sold for $65,000 in cash, the creditors are paid, the partner with the debit capital balance pays the amount owed to the firm, and the remaining cash is distributed to the partners. Enter any subtractions (balance deficiencies, payments, cash distributions, divisions of loss) as negative numbers using a minus sign. If there is no amount or an amount is zero, enter "0".
2. Assume the partner with the capital deficiency in part (b) above declares bankruptcy and is unable to pay the deficiency.
a. Journalize the entry to allocate the partner's deficiency. For a compound transaction, if an amount box does not require an entry, leave it blank.
b. Journalize the entry to distribute the remaining cash. For a compound transaction, if an amount box does not require an entry, leave it blank.