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Financial Accounting

15th Edition
Carl Warren + 2 others
ISBN: 9781337272124

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BuyFindarrow_forward

Financial Accounting

15th Edition
Carl Warren + 2 others
ISBN: 9781337272124
Textbook Problem

Statement of partnership liquidation

After closing the accounts on July 1, prior to liquidating the partnership, the capital account balances of Gold. Porter, and Sims are $55,000, $45,000, and $20,000, respectively. Cash, noncash assets, and liabilities total $56,000, $96,000, and $52,000, respectively. Between July 1 and July 29, the noncash assets are sold for $90,000, the liabilities are paid, and the remaining cash is distributed to the partners. The partners share net income and loss in the ratio of 3:2:1. Prepare a statement of partnership liquidation for the period July 1-29.

To determine

Prepare statement of partnership liquidation for the period July 1-29.

Explanation

Working note 1: Calculation of the sale of assets and division of loss:

Loss=($96,000-$90,000)=$6,000

So, $6,000 is to be shared among the three partners G, P and S in the profit & loss sharing ratio of 3:2:1 respectively.

 Share of G =($6,000×36)=$3,000

 Share�

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