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March, April, and May have been in partnership for a number of years. The partners allocate all profits and losses on a 2:3:1 basis, respectively. Recently, each partner has become personally insolvent and, thus, the partners have decided to liquidate the business in hopes of remedying their personal financial problems. As of September 1, the partnership's balance sheet is as follows:

March, April, and May have been in partnership for a number of years. The partners allocate all profits and losses on a 2:3:1 basis, respectively. Recently, each partner has become personally insolvent and, thus, the partners have decided to liquidate the business in hopes of remedying their personal financial problems. As of September 1, the partnership's balance sheet is as follows:

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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March, April, and May have been in partnership for a number of years. The partners allocate all profits and losses on a 2:3:1 basis, respectively. Recently, each partner has become personally insolvent and, thus, the partners have decided to liquidate the business in hopes of remedying their personal financial problems. As of September 1, the partnership's balance sheet is as follows: Cash Accounts receivable Inventory Land, building, and equipment (net) Total assets Prepare journal entries for the following transactions: (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Sold all inventory for $78,000 cash. Paid $14,100 in liquidation expenses. Paid $62,000 of the partnership's liabilities. Collected $83,000 of the accounts receivable. Distributed safe payments of cash; the partners anticipate no further liquidation expenses. Sold remaining accounts receivable for 30 percent of face value. Sold land, building, and equipment for $39,000. Paid all remaining liabilities of the partnership. Distributed cash held by the business to the partners. $ $ 33,000 128,000 111,000 66,000 338,000 Liabilities March, capital April, capital May, capital Total liabilities and capital $ $ 131,000 42,000 97,000 68,000 338,000
Transcribed Image Text:March, April, and May have been in partnership for a number of years. The partners allocate all profits and losses on a 2:3:1 basis, respectively. Recently, each partner has become personally insolvent and, thus, the partners have decided to liquidate the business in hopes of remedying their personal financial problems. As of September 1, the partnership's balance sheet is as follows: Cash Accounts receivable Inventory Land, building, and equipment (net) Total assets Prepare journal entries for the following transactions: (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Sold all inventory for $78,000 cash. Paid $14,100 in liquidation expenses. Paid $62,000 of the partnership's liabilities. Collected $83,000 of the accounts receivable. Distributed safe payments of cash; the partners anticipate no further liquidation expenses. Sold remaining accounts receivable for 30 percent of face value. Sold land, building, and equipment for $39,000. Paid all remaining liabilities of the partnership. Distributed cash held by the business to the partners. $ $ 33,000 128,000 111,000 66,000 338,000 Liabilities March, capital April, capital May, capital Total liabilities and capital $ $ 131,000 42,000 97,000 68,000 338,000
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