Assume the following assets, liabilities, and partners’ equity in the Chang and Lee partnership on December 31, 2014: Assets = Liabilities + Chang, Capital + Lee, Capital $160,000 = $10,000 + $90,000 + $60,000 The partnership has no cash. When the partners agree to liquidate the business, the assets are sold for $120,000, and the liabilities are paid. Chang and Lee share income and losses in a ratio of 3:1. 1. Prepare a statement of liquidation. 2. Prepare journal entries for the sale of assets, payment of liabilities, distribution of loss from realization, and final distribution of cash to Chang and Lee.
Assume the following assets, liabilities, and partners’ equity in the Chang and Lee partnership on December 31, 2014:
Assets = Liabilities + Chang, Capital + Lee, Capital
$160,000 = $10,000 + $90,000 + $60,000
The partnership has no cash. When the partners agree to liquidate the business, the
assets are sold for $120,000, and the liabilities are paid. Chang and Lee share income
and losses in a ratio of 3:1.
1. Prepare a statement of liquidation.
2. Prepare
loss from realization, and final distribution of cash to Chang and Lee.
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