On June 3, 2015, the firm of Adams, Watkis, and Cooper decided to liquidate its partner- ship. The partners have capital balances of $14,000, $84,000, and $118,000, respectively. The cash balance is $29,000, the carrying value of accounts receivable totals $242,000, and liabilities total $55,000. The partners share income and losses of the partnership in a ratio of 1:2:2.

Instructions

1. Prepare a statement of partnership liquidation, covering the period June 3-29, 2015, for each of the following independent assumptions:

a. Accounts receivable are sold for $220,000, the creditors are paid, and the

remaining cash is distributed to the partners.

b. Accounts receivable are sold for $132,000, the creditors are paid, the partner

with the debit capital balance pays the amount owed to the firm, and the

remaining cash is distributed to the partners.

2. Assume the partner with the capital deficiency in part (b) above declares bankruptcy and is unable to pay the deficiency. Journalize the entries to

(a) Allocate the partner's deficiency

(b) Distribute the remaining cash.