After the accounts are closed on April 10, prior to liquidating the partnership, the capital accounts of Zach Fairchild, Austin Lowes, and Amber Howard are $40,700, $7,200, and $33,500, respectively. Cash and noncash assets total $9,600 and $81,800, respectively. Amounts owed to creditors total $10,000. The partners share income and losses in the ratio of 1:1:2. Between April 10 and April 30, the noncash assets are sold for $43,400, the partner with the capital deficiency pays the deficiency to the partnership, and the liabilities are paid. Required: 1. Prepare a statement of partnership liquidation, indicating (a) the sale of assets and division of loss, (b) the payment of liabilities, (c) the receipt of the deficiency (from the appropriate partner), and (d) the distribution of cash.
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After the accounts are closed on April 10, prior to liquidating the partnership, the capital accounts of Zach Fairchild, Austin Lowes, and Amber Howard are $40,700, $7,200, and $33,500, respectively. Cash and noncash assets total $9,600 and $81,800, respectively. Amounts owed to creditors total $10,000. The partners share income and losses in the ratio of 1:1:2. Between April 10 and April 30, the noncash assets are sold for $43,400, the partner with the capital deficiency pays the deficiency to the partnership, and the liabilities are paid.
Required:
1. Prepare a statement of partnership liquidation, indicating (a) the sale of assets and division of loss, (b) the payment of liabilities, (c) the receipt of the deficiency (from the appropriate partner), and (d) the distribution of cash.
Enter any subtractions (balance deficiencies, payments, cash distributions, divisions of loss, sale of assets) as negative numbers using a minus sign. If there is no amount or an amount is zero, enter "0".
Fairchild, Lowes, and Howard
Statement of Partnership Liquidation
For the Period April 10–30Capital Cash + Noncash Assets = Liabilities + Fairchild (1/4) + Lowes (1/4) + Howard (2/4) Balances before realization $fill in the blank 1 $fill in the blank 2 $fill in the blank 3 $fill in the blank 4 $fill in the blank 5 $fill in the blank 6 Sale of assets and division of loss fill in the blank 7 fill in the blank 8 fill in the blank 9 fill in the blank 10 fill in the blank 11 fill in the blank 12 Balances after realization $fill in the blank 13 $fill in the blank 14 $fill in the blank 15 $fill in the blank 16 $fill in the blank 17 $fill in the blank 18 Payment of liabilities fill in the blank 19 fill in the blank 20 fill in the blank 21 fill in the blank 22 fill in the blank 23 fill in the blank 24 Balances after payment of liabilities $fill in the blank 25 $fill in the blank 26 $fill in the blank 27 $fill in the blank 28 $fill in the blank 29 $fill in the blank 30 Receipt of deficiency fill in the blank 31 fill in the blank 32 fill in the blank 33 fill in the blank 34 fill in the blank 35 fill in the blank 36 Balances $fill in the blank 37 $fill in the blank 38 $fill in the blank 39 $fill in the blank 40 $fill in the blank 41 $fill in the blank 42 Cash distributed to partners fill in the blank 43 fill in the blank 44 fill in the blank 45 fill in the blank 46 fill in the blank 47 fill in the blank 48 Final balances $fill in the blank 49 $fill in the blank 50 $fill in the blank 51 $fill in the blank 52 $fill in the blank 53 $fill in the blank 54
2. Assume that the partner with the capital deficiency declares bankruptcy and is unable to pay the deficiency.
a.
Journalize the entry to allocate the partner's deficiency. If an amount box does not require an entry, leave it blank.
Account Debit Credit fill in the blank 56 fill in the blank 57 fill in the blank 59 fill in the blank 60 fill in the blank 62 fill in the blank 63
b. Journalize the entry to distribute the remaining cash. If an amount box does not require an entry, leave it blank.
Account Debit Credit fill in the blank 65 fill in the blank 66 fill in the blank 68 fill in the blank 69 fill in the blank 71 fill in the blank 72
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