ASSIGNMENT / CH12-HOP-1

Larry, Moe, and Curly who share in income and losses in the ratio of 2:3:5, decided to discontinue operations as of April 30, 2013, and liquidate their partnership. After the accounts were closed on April 30, 2013, the following trial balance was prepared:

Larry, Moe, and Curly

Post-Closing Trial Balance

April 30, 2013

DEBIT CREDIT

BALANCES BALANCES

Cash 8,000

Noncash Assets 107,800

Liabilities 35,700

Larry, Capital 13,140

Moe, Capital 25,110

Curly, Capital 41,850

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$115,800 $115,800

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Between May 1 and May 18, the noncash assets were sold for $36,800, and the liabilities were paid.

INSTRUCTIONS:

1. Assuming that the partner with the capital deficiency pays the entire amount owed to the partnership, prepare a statement of partnership liquidation.

2. Journalize the entries to record:

a). the sale of assets.

b). the division of loss on the sale of assets.

c). the payment of liabilities.

d). the receipt of the deficiency

e). the distribution of cash to the partners.