The partnership of Anthony and Davis had an unprofitable year and agreed to liquidate their business on December 31, 2019. The Statement of Financial Position as of December 31, 2019 is presented below: ASŞETS Cash Accounts Receivable P 1,000 P 80,000 20,000 Less Allowance for Bad Debts Merchandise Inventory Prepaid Advertising Office Equipment 60,000 50,000 2,000 P 100,000 60,000 Less Accumulated Depreciation 40.000 TOTAL ASSETS P 153,000 LIABILITIES AND EQUITY P 20,000 Accounts Payable Notes Payable (due October 31, 2020) Anthony, Capital Davis, Capital 86,000 30,000 17,000 TOTAL LIABILITIES AND EQUITY P 153,000 The information concerning liquidation are as follows: 1. Accounts receivable's net carrying value plus 20% of the estimated bad debts were collected. 2. Merchandise inventory were realized for P 25,000 3. The contract for Prepaid Advertising has a cancellation value of P 800. 4. Office Equipment were realized equal to 60% of their book value. 5. Unrecorded Accounts Payable of P 2,000 were discovered. 6. Bank charges of P 1,000 was added to the note for early payment than the due date. Anthony is personally insolvent. However, Davis' personal assets exceeded his personal liabilities by P 4,000. Anthony and Davis share profits and losses 40%; 60%, respectively. Required: 1. Prepare a schedule showing the net amount of liquidation gain or loss. 2. Prepare a Statement of Liquidation. 3. Journal entries to record the liquidation.
The partnership of Anthony and Davis had an unprofitable year and agreed to liquidate their business on December 31, 2019. The Statement of Financial Position as of December 31, 2019 is presented below: ASŞETS Cash Accounts Receivable P 1,000 P 80,000 20,000 Less Allowance for Bad Debts Merchandise Inventory Prepaid Advertising Office Equipment 60,000 50,000 2,000 P 100,000 60,000 Less Accumulated Depreciation 40.000 TOTAL ASSETS P 153,000 LIABILITIES AND EQUITY P 20,000 Accounts Payable Notes Payable (due October 31, 2020) Anthony, Capital Davis, Capital 86,000 30,000 17,000 TOTAL LIABILITIES AND EQUITY P 153,000 The information concerning liquidation are as follows: 1. Accounts receivable's net carrying value plus 20% of the estimated bad debts were collected. 2. Merchandise inventory were realized for P 25,000 3. The contract for Prepaid Advertising has a cancellation value of P 800. 4. Office Equipment were realized equal to 60% of their book value. 5. Unrecorded Accounts Payable of P 2,000 were discovered. 6. Bank charges of P 1,000 was added to the note for early payment than the due date. Anthony is personally insolvent. However, Davis' personal assets exceeded his personal liabilities by P 4,000. Anthony and Davis share profits and losses 40%; 60%, respectively. Required: 1. Prepare a schedule showing the net amount of liquidation gain or loss. 2. Prepare a Statement of Liquidation. 3. Journal entries to record the liquidation.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 3E: The following are independent events: a. A partnership is preparing to become a corporation and sell...
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The partnership of Anthony and Davis had an unprofitable year and agreed to liquidate their business on December 31, 2019. The Statement of Financial Position as of December 31, 2019
is presented below:
ASŞETS
Cash
P
1,000
Accounts Receivable
P 80,000
Less Allowance for Bad Debts
20,000
60,000
Merchandise Inventory
50,000
Prepaid Advertising
Office Equipment
Less Accumulated Depreciation
2,000
P 100,000
60,000
40.000
TOTAL ASSETS
P 153,000
LIABILITIES AND EQUITY
Accounts Payable
P 20,000
Notes Payable (due October 31, 2020)
Anthony, Capital
Davis, Capital
86,000
30,000
17,000
TOTAL LIABILITIES AND EQUITY
P 153,000
The information concerning liquidation are as follows:
1. Accounts receivable's net carrying value plus 20% of the estimated bad debts were collected.
2. Merchandise inventory were realized for P 25,000
3. The contract for Prepaid Advertising has a cancellation value of P 800.
4. Office Equipment were realized equal to 60% of their book value.
5. Unrecorded Accounts Payable of P 2,000 were discovered.
6. Bank charges of P 1,000 was added to the note for early payment than the due date.
Anthony is personally insolvent. However, Davis' personal assets exceeded his personal liabilities by P 4,000. Anthony and Davis share profits and losses 40%; 60%, respectively.
Required:
1. Prepare a schedule showing the net amount of liquidation gain or loss.
2. Prepare a Statement of Liquidation.
3. Journal entries to record the liquidation.
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