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Lui, Montavo, and Johnson plan to liquidate their Premium Pool and Spa business. They have always shared profit and losses in a 1:4:5 ratio, and on the day of the liquidation their balance sheet appeared as follows: Premium Pool and Spa Balance Sheet June 30, 2020 Assets Cash $ 84,250 Machinery $ 626,750 Less: Accumulated depreciation 156,000 470,750 Total assets $ 555,000 Liabilities Accounts payable $ 159,600 Equity Jim Lui $ 78,200 Kent Montavo, capital 202,800 Dave Johnson, capital 114,400 Total equity 395,400 Total liabilities and equity $ 555,000

Lui, Montavo, and Johnson plan to liquidate their Premium Pool and Spa business. They have always shared profit and losses in a 1:4:5 ratio, and on the day of the liquidation their balance sheet appeared as follows: Premium Pool and Spa Balance Sheet June 30, 2020 Assets Cash $ 84,250 Machinery $ 626,750 Less: Accumulated depreciation 156,000 470,750 Total assets $ 555,000 Liabilities Accounts payable $ 159,600 Equity Jim Lui $ 78,200 Kent Montavo, capital 202,800 Dave Johnson, capital 114,400 Total equity 395,400 Total liabilities and equity $ 555,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Lui, Montavo, and Johnson plan to liquidate their Premium Pool and Spa business. They have always shared profit and losses in a 1:4:5 ratio, and on the day of the liquidation their balance sheet appeared as follows:
 

Premium Pool and Spa
Balance Sheet
June 30, 2020
Assets            
Cash       $ 84,250  
Machinery $ 626,750        
Less: Accumulated depreciation   156,000     470,750  
Total assets       $ 555,000  
Liabilities            
Accounts payable       $ 159,600  
Equity            
Jim Lui $ 78,200        
Kent Montavo, capital   202,800        
Dave Johnson, capital   114,400        
Total equity         395,400  
Total liabilities and equity       $ 555,000  
 




Requlred: 1. Under the assumption that the machinery is sold and the cash is distributed to the proper parties on June 30, 2020, complete the schedule provided below. Show the sale, the gain or loss allocation, and the distribution of the cash in each of the following unrelated cases: a. The machinery is sold for $526,000. (Negatlve answers should be Indicated by a mlnus slgn.) Premium Pool and Spa June 30, 2020 Accum. Deprec., Machinery Kent Dave Jim Lui, Сapital Accounts Cash Machinery Montavo, Сapital Johnson, Capital Payable Account balances June 30, 2020 Sale of Machinery for $526,000 Balance Payment of liabilities Balance Distribution of cash to partners Balance b. The machinery Is sold for $413,000. (Negative answers should be Indicated by a mlnus slgn.) Premium Pool and Spa June 30, 2020 Accum. Kent Dave Accounts Jim Lui, Cash Machinery Deprec., Machinery Montavo, Capital Johnson, Сapital Payable Capital Account balances June 30, 2020 Sale of Machinery for $413,000 Balance Payment of liabilities Balance Distribution of cash to partners Balance
Transcribed Image Text:Requlred: 1. Under the assumption that the machinery is sold and the cash is distributed to the proper parties on June 30, 2020, complete the schedule provided below. Show the sale, the gain or loss allocation, and the distribution of the cash in each of the following unrelated cases: a. The machinery is sold for $526,000. (Negatlve answers should be Indicated by a mlnus slgn.) Premium Pool and Spa June 30, 2020 Accum. Deprec., Machinery Kent Dave Jim Lui, Сapital Accounts Cash Machinery Montavo, Сapital Johnson, Capital Payable Account balances June 30, 2020 Sale of Machinery for $526,000 Balance Payment of liabilities Balance Distribution of cash to partners Balance b. The machinery Is sold for $413,000. (Negative answers should be Indicated by a mlnus slgn.) Premium Pool and Spa June 30, 2020 Accum. Kent Dave Accounts Jim Lui, Cash Machinery Deprec., Machinery Montavo, Capital Johnson, Сapital Payable Capital Account balances June 30, 2020 Sale of Machinery for $413,000 Balance Payment of liabilities Balance Distribution of cash to partners Balance
c. The machinery Is sold for $194,000, and any partners with resulting deficits can and do pay in the amount of their deficits. (Negatlve answers should be Indicated by a minus sign.) Premium Pool and Spa June 30, 2020 Accum. Kent Dave Accounts Payable Jim Lui, Сaptal Cash Machinery Deprec., Machinery Montavo, Сapital Johnson, Capital Account balances June 30, 2020 Sale of Machinery for $194,000 Balance Payment of liabilities Balance Johnson pays deficiency Balance Distribution of cash to partners Balance d. The machinery is sold for $225,000, and the partners have no assets other than those Invested In the business. (Negative answers should be Indicated by a mlnus slgn.) Premium Pool and Spa June 30, 2020 Accum. Accounts Payable Jim Lui, Сapital Kent Montavo, Capital Dave Johnson, Cash Machinery Deprec., Machinery Сapital Account balances June 30, 2020 Sale of Machinery for $225,000 Balance Payment of liabilities Balance Allocation of deficiency Balance Distribution of cash to partners Balance
Transcribed Image Text:c. The machinery Is sold for $194,000, and any partners with resulting deficits can and do pay in the amount of their deficits. (Negatlve answers should be Indicated by a minus sign.) Premium Pool and Spa June 30, 2020 Accum. Kent Dave Accounts Payable Jim Lui, Сaptal Cash Machinery Deprec., Machinery Montavo, Сapital Johnson, Capital Account balances June 30, 2020 Sale of Machinery for $194,000 Balance Payment of liabilities Balance Johnson pays deficiency Balance Distribution of cash to partners Balance d. The machinery is sold for $225,000, and the partners have no assets other than those Invested In the business. (Negative answers should be Indicated by a mlnus slgn.) Premium Pool and Spa June 30, 2020 Accum. Accounts Payable Jim Lui, Сapital Kent Montavo, Capital Dave Johnson, Cash Machinery Deprec., Machinery Сapital Account balances June 30, 2020 Sale of Machinery for $225,000 Balance Payment of liabilities Balance Allocation of deficiency Balance Distribution of cash to partners Balance
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