Hewitt and Patel are partners, sharing gains and losses equally. They decide to terminate their partnership. Prior to realization, their capital balances are $28,000 and $18,000, respectively. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $35,000. a. What is the amount of a gain or loss on realization? Loss $-11000 a. Subtract the sum of the capital accounts from the cash balance. If it is positive, then there is a gain that increases capital. If the amount is negative, then a loss has occurred and this reduces capital. b. How should the gain or loss be divided between Hewitt and Patel? Hewitt Loss $ Patel Loss $
Hewitt and Patel are partners, sharing gains and losses equally. They decide to terminate their partnership. Prior to realization, their capital balances are $28,000 and $18,000, respectively. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $35,000. a. What is the amount of a gain or loss on realization? Loss $-11000 a. Subtract the sum of the capital accounts from the cash balance. If it is positive, then there is a gain that increases capital. If the amount is negative, then a loss has occurred and this reduces capital. b. How should the gain or loss be divided between Hewitt and Patel? Hewitt Loss $ Patel Loss $
Chapter15: Partnership Accounting
Section: Chapter Questions
Problem 1EB: The partnership of Michelle, Amal, and Maureen has done well. The three partners have shared profits...
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Hewitt and Patel are partners, sharing gains and losses equally. They decide to terminate their
a. What is the amount of a gain or loss on realization?
| Loss | $-11000 |
a. Subtract the sum of the capital accounts from the cash balance. If it is positive, then there is a gain that increases capital. If the amount is negative, then a loss has occurred and this reduces capital.
b. How should the gain or loss be divided between Hewitt and Patel?
| Hewitt | Loss | $ |
| Patel | Loss | $ |
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