On January 1, the partners of Mori, Lux, and Khan (who share profits and losses in the ratio of 5:3:2, respectively) decide to terminate operations and liquidate their partnership. The trial balance at this date follows: General Journal Cash Accounts receivable Inventory Machinery and equipment, net Mori, loan Accounts payable Lux, loan Mori, capital Lux, capital Khan, capital Totals Debit $32,000 94,000 80.000 239,000 Credit 58,000 $ 89,000 48,000 152,000 104,000 88,000 $481,000 $481,000 The partners plan a program of piecemeal conversion of the partnership's assets to minimize liquidation losses. All available cash, less an amount retained to provide for future expenses, is to be distributed to the partners at the end of each month. A summary of the liquidation transactions follows: January February March Required: Collected $65,000 of the accounts receivable; the balance is deemed uncollectible. Received $52,000 for the entire inventory. Paid $8,000 in liquidation expenses. Paid $72,000 to the outside creditors after offsetting a $9,000 credit memorandum received by the partnership on January 11. Retained $24,000 cash in the business at the end of January to cover liquidation expenses. The remainder is distributed to the partners. Paid $9,000 in liquidation expenses. Retained $12,000 cash in the business at the end of the month to cover additional liquidation expenses. Received $160,000 on the sale of all machinery and equipment. Paid $11,000 in final liquidation expenses. Retained no cash in the business. Prepare proposed schedules of liquidation on January 31, February 28, and March 31 to determine the safe payments made to the partners at the end of each of these three months. Complete this question by entering your answers in the tabs below.
On January 1, the partners of Mori, Lux, and Khan (who share profits and losses in the ratio of 5:3:2, respectively) decide to terminate operations and liquidate their partnership. The trial balance at this date follows: General Journal Cash Accounts receivable Inventory Machinery and equipment, net Mori, loan Accounts payable Lux, loan Mori, capital Lux, capital Khan, capital Totals Debit $32,000 94,000 80.000 239,000 Credit 58,000 $ 89,000 48,000 152,000 104,000 88,000 $481,000 $481,000 The partners plan a program of piecemeal conversion of the partnership's assets to minimize liquidation losses. All available cash, less an amount retained to provide for future expenses, is to be distributed to the partners at the end of each month. A summary of the liquidation transactions follows: January February March Required: Collected $65,000 of the accounts receivable; the balance is deemed uncollectible. Received $52,000 for the entire inventory. Paid $8,000 in liquidation expenses. Paid $72,000 to the outside creditors after offsetting a $9,000 credit memorandum received by the partnership on January 11. Retained $24,000 cash in the business at the end of January to cover liquidation expenses. The remainder is distributed to the partners. Paid $9,000 in liquidation expenses. Retained $12,000 cash in the business at the end of the month to cover additional liquidation expenses. Received $160,000 on the sale of all machinery and equipment. Paid $11,000 in final liquidation expenses. Retained no cash in the business. Prepare proposed schedules of liquidation on January 31, February 28, and March 31 to determine the safe payments made to the partners at the end of each of these three months. Complete this question by entering your answers in the tabs below.
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter19: Accounting For Partnerships
Section: Chapter Questions
Problem 5CE
Related questions
Concept explainers
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Question
Transcribed Image Text:On January 1, the partners of Mori, Lux, and Khan (who share profits and losses in
the ratio of 5:3:2, respectively) decide to terminate operations and liquidate their
partnership. The trial balance at this date follows:
General Journal
Cash
Accounts receivable
Inventory
Machinery and equipment, net
Mori, loan
Accounts payable
Lux, loan
Mori, capital
Lux, capital
Khan, capital
Totals
Debit
$32,000
94,000
80.0001
239,000
58.000
Credit
$ 89,000
48,000
152,000
104,000
88,000
$481,000
$ 481,000
The partners plan a program of piecemeal conversion of the partnership's assets to
minimize liquidation losses. All available cash, less an amount retained to provide for
future expenses, is to be distributed to the partners at the end of each month. A
summary of the liquidation transactions follows:
January
February
March
Collected $65,000 of the accounts receivable; the balance is deemed
uncollectible.
Received $52,000 for the entire inventory.
Paid $8,000 in liquidation expenses.
Paid $72,000 to the outside creditors after offsetting a $9,000 credit
memorandum received by the partnership on January 11.
Retained $24,000 cash in the business at the end of January to cover
liquidation expenses. The remainder is distributed to the partners.
Paid $9,000 in liquidation expenses.
Retained $12,000 cash in the business at the end of the month to cover
additional liquidation expenses.
Received $160,000 on the sale of all machinery and equipment.
Paid $11,000 in final liquidation expenses.
Retained no cash in the business.
Required:
Prepare proposed schedules of liquidation on January 31, February 28, and March 31
to determine the safe payments made to the partners at the end of each of these
three months.
Complete this question by entering your answers in the tabs below.
January
February
March
Prepare proposed schedule of liquidation to determine the safe payments made to the partners at
the end of March.
Note: Amounts to be deducted should be entered with a minus sign.
MORI, LUX, AND KHAN PARTNERSHIP
Proposed Schedule of Liquidation
March 31
Cash
Noncash
Assets
Mori,
Liabilities Capital and
Loan 50%
Lux, Capital
and Loan 30%
Khan, Capital
20%
Balances before February 28 safe payments
Safe payments to partners - February 28
Balances - March 1
0
0
Sold machinery
Paid liquidation expenses
Subtotal (actual balances)
0
0
0
0
o
Safe payments to partners - March 31
Ending balances - March 31
$
0 $
0
$
0
$
0 $
$
0
<February
March
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