The Danica, Gaga & Oprah partnership was begun with investments by the partners as follows: Danica,$190; Gaga, $340; and Oprah, $550. Danica, Gaga, and Oprah share income and losses in a 1:1:2 ratio (inpercents: Danica, 25%; Gaga, 25%; and Oprah, 50%). The partners decide to liquidate the partnership aftera few months. On July 31, after all assets were sold and all creditors were paid, only $80 in partnershipcash remain. Assume that Danica pays cash to cover the deficit. Prepare the journal entries on July 31 to record (a) the cash receipt from Danica and (b) the final disbursement of cash to partners.
The Danica, Gaga & Oprah
$190; Gaga, $340; and Oprah, $550. Danica, Gaga, and Oprah share income and losses in a 1:1:2 ratio (in
percents: Danica, 25%; Gaga, 25%; and Oprah, 50%). The partners decide to liquidate the partnership after
a few months. On July 31, after all assets were sold and all creditors were paid, only $80 in partnership
cash remain. Assume that Danica pays cash to cover the deficit. Prepare the
(a) the cash receipt from Danica and (b) the final disbursement of cash to partners.
The first step is to calculate capital balances:
The formulation to calculate the capital balances is:
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