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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Liquidating partnerships—capital deficiency

Lewis, Zapata, and Fowler share equally in net income and net losses. After the partnership sells all assets for cash, divides the losses on realization, and pays the liabilities, the balances in the capital accounts are as follows: Lewis, $73,500 Cr.; Zapata. $41,000 Cr.: Fowler, $17,000 Dr.

  1. a. What term is applied to the debit balance in Fowler’s capital account?
  2. b. What is the amount of cash on hand?
  3. c. Journalize the transaction that must take place for Lewis and Zapata to receive cash in the liquidation process equal to their capital account balances.

a.

To determine

Partnership

It is that form of organization which is owned and managed by two or more persons who invest and share the profits and losses according to a pre-determined ratio.

Liquidating Partnership

The winding up of process of partnership is called liquidation of partnership. At the time of liquidation of partnership realization of account is prepared.

To indicate:  The term that is applied to the debit balance in F’s Capital account.

Explanation

The term that is applied to th...

b.

To determine
 The amount of cash on hand.

c.

To determine

To record: The transaction that must take place for L and Z to receive cash in the liquidation process.

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