After several years of operations, the partnership of Miranda, Leon and Estoque is to be liquidated. After making the closing entries on March 31, 2019 the following accounts remained open: Account Balance Credit Account Title Debit P 150,000 Cash Other Assets Liabilities Miranda, Capital Leon, Capital Estoque, Capital 2,600,000 P 750,000 400,000 600,000 1,000,000 The non-cash assets are sold for P2,150,000. Profits and losses are shared equally. Required: Prepare a statement of partnership liquidation and the entries to record the following: 1. Sale of all non-cash assets. 2. Distribution of loss on realization to the partners. 3. Payment of the liabilities
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Lump-Sum Liquidation with Loss on Realization
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- On March 1, 2020, EE and FF decided to combine their business and form a partnership. Their balance sheets onMarch 1 before adjustments showed the following: 1. Compute the net (debit)/credit adjustment for EE anf FF. EE FF EE FFA. 28,700 ; 28,200 C. (8,700) ; 1,800B. (28,700) ; (28,200) D. 8,700 ; (1,800) 2. Compute the total assets after the formation.A. 1,607,650 C. 1,579,850B. 1,570,850 D. 1,568,750 3. If the partners are to share profits and losses in the ratio of 6:4 and their capital is top reflect this relationship, what is the capital of FF after the formation?A. 400,000 C. 369,740B. 391,700 D. 391,700 4. If If the partners are to share profits and losses in the ratio of 6:4 and their capital is top reflect this relationship with EE’s capital to be used as a basis, what is the capital of FF after the formation?A. 400,000 C. 369,740B. 391,700 D. 391,700On January 02, 2019, the business assets and liabilities of Gail Anne & Precious were as follows: Gail AnnePrecious CashP28,000P62,000 Receivables 200,000 600,000 Inventories 120,000 200,000 PPE 650,000 535,000 Other Assets 2,000 3,000 Accounts Payable 180,000 250,000 Notes Payable 200,000 350,000 Gail Anne and Precious agreed to form a partnership by contributing their net assets subject to the following adjustments: ➢ Receivables of P20,000 in Gail Anne’s books and P40,000 in Precious’ books are uncollectible ➢ Inventories of P6,000 and P7,000 in the respective books of Gail Anne and Precious are worthless ➢ Other assets in both books are to be written off ➢ Accrued interest on notes payable equal to 10% is to be established. The note payable of Gail Anne was dated August 01, 2018 while that of Precious, was dated April 01, 2018. The balances of selected accounts after the formation are: Assets…At the end of its first year of operations on December 31, 2019, CAP Company’s accountsshow the following.Partner Drawing CapitalCharlies $15,000 $40,000Andrew 10,000 25,000Patrick 5,000 15,000The capital balance represents each partner’s initial capital investment. Therefore, net incomeor net loss for 2019 has not been closed to the partners’ capital accounts.Instruction(a) Journalize the entry to record the division of net income for 2019 under each of theindependent assumptions shown on the following:(1) Net income is $50,000. Income is shared 5:3:2.(2) Net income is $40,000. Charlies and Andrew are given salary allowances of$15,000 and $10,000, respectively. The remainder is shared equally.(3) Net income is $37,000. Each partner is allowed interest of 10% on beginningcapital balances. Charlies is given an $20,000 salary allowance. The remainderis shared…
- After years of operations, the partnership of De Vera, Dela Cruz, De Jesus is to be liquidated. After making the closing entries on February 28, 2022, the following accounts were left: Account Debit Credit Cash Non-cash Assets Liabilities De Vera, Capital Dela Cruz, Capital De Jesus, Capital 50,000 2,350,000 400,000 900,000 500,000 600,000 All the non-cash assets were sold for P2,650,000. Profits and losses are shared equally. Required: a. Prepare the statement of partnership liquidation b. Prepare the journal entries for the following: Sale of all non-cash assets and distribution of loss on realization to the partners • Payment of liabilities • Distribution of cash to the partnersThe condensed, adjusted trial balance of the Gary and James Partnership as at December 31, 2024, appears below: Current assets Equipment Accounts payable Long-term debt GARY AND JAMES PARTNERSHIP Adjusted Trial Balance December 31, 2024 Gary, capital Gary, drawings James, capital James, drawings Service revenue Operating expenses 1. 2. Debit $50,000 117,500 295,000 270,000 93,000 $825,500 Credit $32,000 69,000 51,000 43,000 630,500 The partnership agreement stipulates that a division of partnership profit or loss is to be made as follows: A salary allowance of $347,500 to Gary and $287,500 to James. The remainder is to be divided equally. $825,500The capital accounts of Scott and Tucker at the end of the fiscal year 2019 are as follows: Scott, Capital January 1 Balance P210,000 Мay 1 Investment 90,000 October 1 Withdrawal Р60,000 Tucker, Capital January 1 Balance P150,000 April 1 Withdrawal P30,000 The partnership profit for the year ended December 31, 2019 was P300,000. Instruction: Prepare schedule of profit allocation and journal entries to record transfer to profit to the capital accounts under each of the following independent assumptions: 1. Profit is divided 60% to Scott and 40% to Tucker. 2. Profit is divided into ratio of capital balances at the beginning of the period. 3. Profit is divided in the ratio of average capital balance. Interest of 8% is allowed on the average capital and the balance of profit is divided equally. 4. Salaries of P60,000 and P48,000 are allowed to Scott and Tucker, respectively, and the balance of the profit is divided in the ratio of capital balances at the end of the period. 5. 6. Scott is…
- At the end of its first year of operations on December 31, 2019, CAP Company’s accounts show the following.Partner Drawing CapitalCharlies $15,000 $40,000Andrew 10,000 25,000Patrick 5,000 15,000The capital balance represents each partner’s initial capital investment. Therefore, net income or net loss for 2019 has not been closed to the partners’ capital accounts. (Find the attached image for better view) Instruction(a) Journalize the entry to record the division of net income for 2019 under each of the independent assumptions shown on the following:(1) Net income is $50,000. Income is shared 5:3:2.(2) Net income is $40,000. Charlies and Andrew are given salary allowances of $15,000 and $10,000, respectively. The remainder is shared equally.(3) Net income is $37,000. Each partner is allowed interest of 10% on beginning capital balances. Charlies is given an $20,000 salary allowance. The remainder is shared equally. (b) Prepare a schedule showing the division of net income under…Instruction: Prepare the answers in written form using a clean paper (e.g. Yellow pad, bond paper, notebook etc.) and submit a snapshot in CANVAS. Assume A, B, C and D are partners sharing profits 40%, 20%, 20%, 20%, respectively. On January 1, 2020, they agree to liquidate. A balance sheet prepared on this date is shown as follows: Assets Liabilities and Capital Non- Cash assets P 181,800 Liabilities P 84,000 A, Loan 6,000 D, Loan 3,000 A, Capital 26,400 В, Сapital C, Capital D, Capital 25,800 20,400 16,200 Total P 181,800 P 181,800 Results of liquidation are summarized below: Month Proceeds Book Value Liquidation exp. Cash withheld January P72,000 P90,000 P1,200 P4,800 February 21,600 30,000 1,320 1,800 March 19,200 24,000 1,440 1,200 April 6,000 19,800 4,800 600 May 2,400 18,000 960 Required: Prepare the statement of liquidation and related schedule of safe payment for the month of January to May 2020 and determine payment to partners for every month.October 1, 2019, Deku and Dabi decided to pool their assets and form a partnership. The firm is to take over the business assets and assume business liabilities; equities are to be based on net assets transferred after the following adjustments: a. Dabi's inventory is to be valued at P350,000 b. An allowance for uncollectible accounts of P9,000 and P7,500, respectively should be set up. c. Accrued expenses of P21,000 are to be recognized on Deku's books. d. Dabi is to contribute sufficient cash to give him 60% interest in the new firm Statements of financial position for Deku and Dabi in October 1 before adjustments are presented below: Cash Accounts receivable Merchandise inventory Equipment Accum. Depr. - Equip. Total assets Accounts payable Capital Total liabilities and capital Instructions: Dabi Deku 187,500 112,500 450,000 375,000 400,000 300,000 250,000 300,000 (112,500) (37,500) 1,175,000 1,050,000 345,000 830,000 1,175,000 250,000 800,000 1,050,000 1. Give the entries to adjust…
- After several years of operations, the partnership of Arenas, Dulay and Laurente is to be liquidated. After making the closing entries on June 30, 2018, the following accounts remained open: Account Title Debit Credit Cash P 50,000 Non-cash Assets 2,350,000 Liabilities P 400,000 Arenas, Capital 900,000 Dulay, Capital 500,000 Laurente, Capital 600,000 The non-cash assets are sold for P2,650,000. Profits and losses are shared equally. Prepare a Statement of Partnership Liquidation and the entries to record the following: 1. Sale of all non-cash assets 2. Distribution of gain on realization to the partners 3. Payment of the liabilitiesAfter several years of operations, the partnership of Arenas, Dulay and Laurente is to be liquidated. After making the closing entries on June 30, 2018, the following accounts remained open: Account Title Debit Credit Cash P 50,000 Non-cash Assets 2,350,000 Liabilities P 400,000 Arenas, Capital 900,000 Dulay, Capital 500,000 Laurente, Capital 600,000 The non-cash assets are sold for P2,650,000. Profits and losses are shared equally. Prepare a Statement of Partnership Liquidation and the entries to record the following: 1. Distribution of cash to the partnersA. After several years of operations, the partnership of Arenas, Dulay and Laurente is to be liquidated. After making the closing entries on June 30, 2018, the following accounts remained open: Account Title Debit Credit Cash P 50,000 Non-cash Assets 2,350,000 Liabilities 400,000 Arenas, Capital 900,000 Dulay, Capital 500,000 Laurente, Capital 600,000 The non-cash assets are sold for P2,650,000. Profits and losses are shared equally. Prepare a Statement of Partnership Liquidation and the entries to record the following: 1. Sale of all non-cash assets 2. Distribution of gain on realization to the partners 3. Payment of the liabilitites 4. Distribution of cash to the partners