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Century 21 Accounting Multicolumn Journal

Century 21 Accounting Multicolumn Journal

11th Edition

ISBN:9781337679503

Author:Gilbertson

Publisher:Gilbertson

Chapter23: Accounting For Partnerships

Section: Chapter Questions

Problem 1CP

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Question

please simple to explain
The partnership of Wingler, Norris, Rodgers, and Guthrie was formed several years ago as a local architectural firm. Several
partners have recently undergone personal financial problems and have decided to terminate operations and liquidate the
business. The following balance sheet is drawn up as a guideline for this process:
$ 15,000 Liabilities
82,000 Rodgers, loan
$ 74,000
35,000
120,000
88,000
74,000
60, 000
Cash
Accounts receivable
Inventory
Land
Building and equipment (net)
Wingler, capital (30%)
Norris, capital (10%)
168,000 Rodgers, capital (20%)
Guthrie, capital (40%)
101,000
85,000
Total assets
$451,000
Total liabilities and capital
$451,000
When the liquidation commenced, liquidation expenses of $16,000 were anticipated as being necessary to dispose of all
property.
Part A
Prepare a predistribution plan for this partnership.
Part B
The following transactions transpire during the liquidation of the Wingler, Norris, Rodgers, and Guthrie partnership:
1. Collected 80 percent of the total accounts receivable with the rest judged to be uncollectible.
2. Sold the land, building, and equipment for $150,000.
3. Distributed safe payments of cash.
4. Learned that Guthrie, who has become personally insolvent, will make no further contributions.
5. Paid all liabilities.
6. Sold all inventory for $71,000.
7. Distributed safe payments of cash again.
8. Paid actual liquidation expenses of $11,000 only.
9. Made final cash disbursements to the partners based on the assumption that all partners other than Guthrie are personally
solvent.
Prepare journal entries to record these liquidation transactions.
Complete this question by entering your answers in the tabs below.
Required A
Required B
Prepare a predistribution plan for this partnership. (Do not round intermediate calculations.)
Rodgers,
Loan and
Guthrie,
Wingler,
Capital
Norris,
Capital
Capital
Capital
74,000 S 60,000
Beginning balances
Assumed loss of Schedule 1
120,000 $ 88,000 S
Step one balances
%2$
120,000 $88,000 S
74,000 $ 60,000
Assumed loss of Schedule 2
Step two balances
120,000 $
88,000 S
74,000 S 60.000
Assumed loss of Schedule 3
Step three balances
120,000 $
88,000 $
74,000 $ 60,000

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