Assignment

Part 1 (20 points): Hooks and Franklin are in the process of liquidating their partnership. They share profits and losses in a ratio of 3:1. They have sold all the non cash assets of the partnership. The transactions for the sales are as follows:

Date	Transactions
May 15	Equipment, with a book value of $10,000 was sold for $12,000
May 17	Accounts receivable worth $7,000 sold to a finance broker:$6,800
May 20	Merchandise inventory which cost $3,000, was sold for $1,900

Record the journal entries for the sale of non cash assets by using the general journal.

Instructions: 1. Remember that the journal entries have to be made for both gain and loss. 2. Pass journal entries separately for each transaction. 3. Highlight gain or loss on the general journal itself.

Part 2 (11 points):

Rex & Jacks Novelty Store, a partnership business, has planned to liquidate. Your task is to help them liquidate the partnership.

Listed below are the remaining assets and liabilities of the business. Rex and Jack share all profits and losses equally. Assets:

Cash in Bank	$20,000
Accounts Receivable	$12,000
Merchandise Inventory	$42,000
Equipment	$60,000

Liabilities: Accounts Payable $15,500

Partners Equity:

Rexs capital	$59,250
Jacks capital	$59,250

Liquidation transactions are listed below:

Customers will have to pay their accounts in full before the liquidation date.

Merchandise inventory was sold for $40,000 resulting in a loss of $2,000 to the partnership.

Equipment was sold to a local retailer for $70,000 resulting in a gain of $10,000.

Accounts payable will be paid in full.

Instructions:

Journalize and post the journal entries.

Calculate the share of each partner at end of the liquidation.