Q: Allocating profits and losses to the partners, accounting for the liquidation of a partnership
ABC is a partnership owned by Alders, Byron, and Calvin, who share profits and losses in the ratio of 1:3:4. The account balances of the partnership at June 30 follow.
|
|
ABC |
|
|
|
Adjusted Trial Balance |
|
|
|
June 30,2014 |
|
|
|
|
BALANCE |
|
| Account Title |
|
Debit |
|
Credit |
| Cash |
$ |
33,000 |
|
|
| Non-cash Assets |
|
117,000 |
|
|
| Notes payable |
|
|
$ |
32,000 |
| Alders Capital |
|
|
|
22,000 |
| Byron Capital |
|
|
|
50,000 |
| Calvin Capital |
|
|
|
53,000 |
| Alders withdrawals |
|
9,000 |
|
|
| Byron withdrawals |
|
27,000 |
|
|
| Calvin withdrawals |
|
49,000 |
|
|
| Sales Revenue |
|
|
|
164,000 |
| Salaries Expense |
|
74,000 |
|
|
| Rent Expense |
|
12,000 |
|
|
| Total |
$ |
321,000 |
$ |
321,000 |
Requirements
1. Prepare the June 30 entries to close the revenue, expense, income summary, and withdrawal accounts.
2. Open each partner's capital T-account with the adjusted balance, post the closing entries to their accounts, and determine each partner's ending capital balance.
3. Prepare the June 30 entries to liquidate the partnership assuming the non-cash assets are sold for $120,000.