Toast, a Belleville, Ontario, restaurant, began with investments by
Chapter5: Gross Income: Exclusions
Section: Chapter Questions
Problem 32P
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Question
Transcribed Image Text:Toast, a Belleville, Ontario, restaurant, began with investments by the partners as follows: Lea, $236,700; Eva, $178,300; and Sophia,
$192,700. The first year of operations did not go well, and the partners finally decided to liquidate the partnership, sharing all losses
equally. On December 31, after all assets were converted to cash and all creditors were paid, only $61,100 in partnership cash
remained.
Required:
1. Calculate the capital account balances of the partners after the liquidation of assets and payment of creditors. (Negative amounts
should be indicated by a minus sign.)
Required:
1. Calculate the capital account balances of the partners after the liquidation of assets and payment of creditors. (Negative amounts
should be indicated by a minus sign.)
Capital
balances
2. Assume that any partner with a deficit pays cash to the partnership to cover the deficit. Present the general journal entries on
December 31 to record the cash receipt from the deficient partner(s) and the final disbursement of cash to the partners.
1
2
Answer is complete but not entirely correct.
Eva
Sophia
Total
S 54.700$ (3,800) $10,600S 61.000 0
2. Assume that any partner with a deficit pays cash to the partnership to cover the deficit. Present the general journal entries on
December 31 to record the cash receipt from the deficient partner(s) and the final disbursement of cash to the partners.
No
1
2
Date
Dec 31
Lea
Dec 31
Date
Dec
Answer is complete but not entirely correct.
Cash
Dec 31
Answer is complete but not entirely correct.
Eva, capital
Lea, capital
Sophia, capital
Cash
Lea, capital
Sophia, capital
Eva, capital
General Journal
Lea, capital
Sophia, capital
Cash
O
000
Debit
3,800
3. Now make the contrary assumption that any partner with a deficit is not able to reimburse the partnership. Present journal entries:
(a) to transfer the deficit of any deficient partners to the other partners, and (b) to record the final disbursement of cash to the partners.
54,200
10,600
Answer is complete but not entirely correct.
General Journal
000
O
♥
O
O
Credit
Debit
1,900
1.900
3,800
64,800
52,300
8,700
Return to question
Credit
3,800
61,000
Return to questo
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