At December 31, Baylee Company has cash of $40,000, equipment of $130,000, accumulated depreciation of $40,000, liabilities

Question:

At December 31, Baylee Company has cash of $40,000, equipment of $130,000, accumulated depreciation of $40,000, liabilities of $55,000, and the following partners' capital balances: H. Bayer $45,000 and J. Leech $30,000. The partnership is liquidated on December 31 of the current year and $100,000 cash is received for the equipment. Bayer and Leech share profits and losses equally.

Instructions

(a) How much is the gain or loss on the disposal of the noncash assets?

(b) How much of that gain or loss is allocated to each partner?

Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...