a
Lump-sum liquidations: liquidation of
In some situations a deficit may occur in a partner’s capital account if its credit balance is too low to absorb share of losses, such deficit may be cleared by either partner investing cash or other asset or the partner’s capital deficit is distributed to the other partners in their resulting loss sharing ratio.
Requirement 1
The statement of realization and liquidation for CDG on December 10, 20X6.
b
Lump-sum liquidations: liquidation of partnership in which all assets are converted into cash within a short time, creditors are paid, and a single lump-sum payment is made to the partners for their capital interests. Partnership may experiences losses on disposal of assets, because it has to make offer below the normal selling price to encourage immediate sales. The partnership attempts to collect receivable has to offer large cash discounts for prompt payments. Any goodwill on the partnership books is generally written off when the partnership begins liquidation because it is no longer a going concern.
In some situations a deficit may occur in a partner’s capital account if its credit balance is too low to absorb share of losses, such deficit may be cleared by either partner investing cash or other asset or the partner’s capital deficit is distributed to the other partners in their resulting loss sharing ratio.
Requirement 2
The schedule of the net worth of each partner after liquidation.
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ADVANCED FIN. ACCT. LL W/ACCESS>CUSTOM<
- ENTRIES: PARTNERSHIP LIQUIDATION On liquidation of the partnership of J. Hui and K. Cline, as of November 1, 20--, inventory with a book value of 180,000 is sold for 230,000. Given that Hui and Cline share profits and losses equally, prepare the entries for the sale and the allocation of gain.arrow_forwardSTATEMENT OF PARTNER SHIP LIQUIDATION WITH LOSS After several years of operations, the partnership of Delco, Smith, and Walker is to be liquidated. After making closing entries on March 31, 20--, the following accounts remain Open. The noncash assets are sold for 165,000. Profits and losses are shared equally. REQUIRED 1. Prepare a statement of partnership liquidation for the period April 115, 20--, showing the following: (a) The sale of noncash assets on April 1 (b) The allocation of any gain or loss to the partners on April 1 (c) The payment of the liabilities on April 12 (d) The distribution of cash to the partners on April 15 2. Journalize these four transactions in a general journal.arrow_forwardSTATEMENT OF PARTNER SHIP LIQUIDATION WITH LOSS After several years of operations, the partnership of Nelson, Pope, and Williams is to be liquidated. After making closing entries on March 31, 20--, the following accounts remain open: REQUIRED 1. Prepare a statement of partnership liquidation for the period July 120, 20--, showing the following: (a) The sale of noncash assets on July 1 (b) The allocation of any gain or loss to the partners on July 1 (c) The payment of the liabilities on July 15 (d) The distribution of cash to the partners on July 20 2. Journalize these four transactions in a general journal.arrow_forward
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