1.

After discontinuing the ordinary business operations and closing the accounts if May 7, the ledger id the partnership of A, B, and C indicated the following:

Cash$7,500

Noncash Assets105,000

Liabilities$ 27,500

A, Capital45,000

B, Capital15,000

C, Capital25,000

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$112,500$112,500

The partners share net income and losses in the ration of 3:2:1. Between May 7-30, the noncash assets were sold for $120,000, the liabilities were paid, and the remaining cash was distributed to the partners. (a) Prepare a statement of partnership liquidation.

(b) Assume the same facts as in (a) except that the noncash assets were sold for $45,000 and any partner with a capital deficiency pays the amount of the deficiency to the partnership. Prepare a statement of partnership liquidation.

2.

C and D had capital balances of $60,000 and $120,000 respectively on January 1 of the current year. On May 8, C invested an additional $10,000 in the partnership. During the year, C and D withdrew $25,000 and $35,000 respectively. After closing all expense and revenue accounts at the end of the year, Income Summary has a credit balance of $90,000. The net income is divided in the ration of 2:3 after a salary of $40,000 to C.

Journalize the entries to close the income summary account and the drawing accounts.

Prepare the statement of owner's equity for the current year.