After the accounts are closed on July 3, 2015, prior to liquidating the partnership, the capital accounts of Whitney Lacy, Eli Oliver, and Marc Dussault are $28,200, $7,800, and $37,200, respectively. Cash and accounts receivable total $5,800 and $82,400, respec- tively. Amounts owed to creditors total $15,000. The partners share income and losses in a ratio of 2:1:1. Between July 3 and July 29, the accounts receivable are sold for $33,200, the partner with the capital deficiency pays his deficiency to the partnership, and the liabilities are paid.
Instructions
1. Prepare a statement of partnership liquidation, indicating (a) the sale of assets and division of loss, (b) the payment of liabilities, (c) the receipt of the deficiency (from the appropriate partner), and (d) the distribution of cash.
2. Assume the partner with the capital deficiency declares bankruptcy and is unable to pay the deficiency. Journalize the entries to
(a) Allocate the partner's deficiency
(b) Distribute the remaining cash.