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Question 1 (9 Marks)
Aliya, Bob and Carter decided to terminate their partnership on December 31, 2020.
All income and losses are allocated in a ratio of [Link].
At the time of liquidation, their balance sheet showed the following:
ABC Partnership
Balance Sheet
December 31, 2020
Assets
Current Assets:
Cash $ 354,000
Property, Plant and Equipment:
Office Equipment $ 120,000
Less: Accumulated Depreciation 65,000 55,000
Total Assets $ 409,000
Liabilities
Accounts Payable $ 10,000
Mortgage Payable 325,000
Total Liabilities 335,000
Partners' Equity
Aliya, Capital $ 35,000
Bob, Capital 22,000
Carter, Capital 17,000
Total Partners' Equity 74,000
Total Liabilities and Partners' Equity $ 409,000
Additional Information: On December 31, 2020 the equipment is sold for $40,000.
Required: Complete the schedule provided to show the steps to liquidate the partnership. (1 mark)
Prepare all journal entries necessary to liquidate the partnership. (8 marks)
Explanations for each journal entry is not required.
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Student Name:
Date Account Debit Credit
ip. (1 mark)
You may close this file as often as you like in order to save your work. A new URL will be saved each
You must save your URL before the 30 minutes has expired or you will lose your work.
Question 1 (9 Marks)
Aliya, Bob and Carter decided to terminate their partnership on December 31, 2020.
All income and losses are allocated in a ratio of [Link].
At the time of liquidation, their balance sheet showed the following:
ABC Partnership
Balance Sheet
December 31, 2020
Assets
Current Assets:
Cash $ 354,000
Property, Plant and Equipment:
Office Equipment $ 120,000
Less: Accumulated Depreciation 65,000 55,000
Total Assets $ 409,000
Liabilities
Accounts Payable $ 10,000
Mortgage Payable 325,000
Total Liabilities 335,000
Partners' Equity
Aliya, Capital $ 35,000
Bob, Capital 22,000
Carter, Capital 17,000
Total Partners' Equity 74,000
Total Liabilities and Partners' Equity $ 409,000
Additional Information: On December 31, 2020 the equipment is sold for $40,000.
Required: Complete the schedule provided to show the steps to liquidate the partnership. (1 mark)
Prepare all journal entries necessary to liquidate the partnership. (8 marks)
Explanations for each journal entry is not required.
rk. A new URL will be saved each time.
will lose your work.
Student Name:
Gain/(loss on liquidation) $ (15,000)
Ratio:
0.5 0.3333333
Cash Off. Equip. Accum. Dep A/P Mort. Payable A, Capital B, Capital
Balance $ 354,000 $ 120,000 65,000 $ 10,000 325,000 $ 35,000 22,000
Sell non-cash assets 40,000 $ (120,000) $ (65,000) $ (7,500) $ (5,000)
Balance $ 394,000 $ - $ - $ 10,000 $ 325,000 $ 27,500 $ 17,000
Pay liabilities $ (335,000) $ (10,000) $ (325,000)
Balance $ 59,000 $ - $ - $ - $ - $ 27,500 $ 17,000
Distribute cash $ (59,000) $ (27,500) $ (17,000)
Balance $ - $ - $ - $ - $ - $ - $ -
Date Account Debit Credit
31-Dec-20
Cash 40,000
Accum. Depreciation 65,000
Loss on liquidation 15,000
Office Equipment 120,000
Aliya, Capital 7,500
Bob, Capital 5,000
Carter, Capital 2,500
Loss on liquidation 15,000
ip. (1 mark) A/P 10,000
Mortgage Payable 325,000
Cash 335,000
Aliya, Capital 27,500
Bob, Capital 17,000
Carter, Capital 14,500
Cash 59,000
0.1666667
C, Capital
17,000
$ (2,500)
$ 14,500
$ 14,500
$ (14,500)
$ -
Credit
120,000
15,000
335,000
59,000
Practice test question:
Layla, Suresh, and Nam are partners in Designs Unlimited. Their capital balances are $150,000, $140,000, and $250,000, respe
Nam retires on March 15, 2020, and has agreed to accept $300,000 for their share of the partnership.
Record Nam's retirement and calculate the resulting balances in the capital accounts.
Solution:
Nam, capital 250,000
Layla, capital 25,000 With withdrawing partner leaving, there is a bonus of $50,0
Suresh, capital 25,000 evenly between Layla and Suresh because the remaining rati
Cash 300,000
300,000 - 250,000 = 50,000 * 2/4 = 25,000
Layla, capital Suresh, capital Nam, Capital
150,000 140,000
25,000 25,000 250,000
Ending balances 125,000 115,000
000, and $250,000, respectively, on March 15, 2020. They share profit and losses in the ratio of [Link].
there is a bonus of $50,000 to Nam. It is split
because the remaining ratios for each are 2/4 and 2/4.
Nam, Capital
250,000
