After the accounts are closed on February 3, 2016, prior to liquidating the partnership, the capital accounts of William Gerloff, Joshua Chu, and Courtney Jewett are $19,180, $4,020, and $22,140, respectively. Cash and noncash assets total $5,600 and $54,240, respectively. Amounts owed to creditors total $14,500. The partners share income and losses in the ratio of 2:1:1. Between February 3 and February 28, the noncash assets are sold for $34,560, the partner with the capital deficiency pays the deficiency to the partnership, and the liabilities are paid.

	Required:
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. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers (balance deficiencies, payments, cash distributions, divisions of loss), use a minus sign. If there is no amount to be reported for items (a) - (d), the cell can be left blank. However, in the balance rows, a balance of zero MUST be indicated by entering "0".
2.	Assume the partner with the capital deficiency declares bankruptcy and is unable to pay the deficiency. Journalize the entries on Feb. 28 to (a) allocate the partners deficiency and (b) distribute the remaining cash. Refer to the Chart of Accounts for exact wording of account titles.

CHART OF ACCOUNTS

Gerloff, Chu, and Jewett

General Ledger

	ASSETS
110	Cash
111	Petty Cash
112	Accounts Receivable
113	Allowance for Doubtful Accounts
114	Interest Receivable
115	Notes Receivable
116	Inventory
117	Supplies
118	Office Supplies
119	Prepaid Insurance
120	Land
123	Building
124	Accumulated Depreciation-Building
125	Equipment
126	Accumulated Depreciation-Equipment
129	Asset Revaluations
133	Patent

	LIABILITIES
210	Accounts Payable
211	Salaries Payable
213	Sales Tax Payable
214	Interest Payable
215	Notes Payable

	EQUITY
310	William Gerloff, Capital
311	William Gerloff, Drawing
312	Courtney Jewett, Capital
313	Courtney Jewett, Drawing
314	Joshua Chu, Capital
315	Joshua Chu, Drawing
330	Income Summary

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Merchandise Sold
520	Salary Expense
521	Advertising Expense
522	Depreciation Expense-Building
523	Depreciation Expense-Equipment
526	Repairs Expense
529	Selling Expenses
531	Rent Expense
533	Insurance Expense
534	Supplies Expense
535	Office Supplies Expense
536	Credit Card Expense
537	Cash Short and Over
538	Property Tax Expense
539	Miscellaneous Expense

Labels

For Period February 3-28, 2016

For the Year Ended February 28, 2016

Amount Descriptions

Balances after payment of liabilities

Balances after realization

Balances before realization

Capital additions

Cash distributed to partners

Final balances

Less partner withdrawals

Net income for the year

Payment of liabilities

Receipt of deficiency

Sale of assets and division of loss

Gerloff, Chu, and Jewett

Statement of Partnership Liquidation

1		Cash +	Noncash Assets =	Liabilities +	Capital, Gerloff (2/4) +	Capital, Chu (1/4) +	Capital, Jewett (1/4)
2
3
4
5
6
7
8	Balances
9
10

2. Assume the partner with the capital deficiency declares bankruptcy and is unable to pay the deficiency. Journalize the entries on Feb. 28 to (a) allocate the partners deficiency and (b) distribute the remaining cash. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6