Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Craig, Joshi, and Meng decide to liquidate their partnership as of Dec. 3 1 , Yr 1 0 . The below trial balance provides information

Craig, Joshi, and Meng decide to liquidate their partnership as of Dec. 31, Yr 10. The below trial balance provides information relating to Yr10 operations, and account balances prior to closing. Note that Joshi withdrew $2,000 from his partnership account on July 1, Yr 10.
According to the partnership agreement, profits and losses are distributed as follows:
-Annual Salary Allowance: Craig $40,000, Joshi $40,000, and Meng $20,000
-Interest on Beginning Partners' Capital Account: 5%
-Remaining is allocated evenly to all partners
According to the partnership agreement, upon liquidation profits or losses are allocated:
Craig 40%
Joshi 40%
Meng 20%
Requirments:
1. Calculate Net Income.
2. Prepare a schedule showing the distribution of Yr 10 net income.
3. Prepare year-end journal entries to close the Yr 10 net earnings to the partners and close Joshi's cash withdrawal.
4. Calculate the partners' capital balances after the closing.
5. Calculate the gain or loss on sell of non-cash assets.
6. Enter the calculated partners' capital balances (from step 4) into the Liquidation Schedule as well as the balances for Cash, Non-Cash Assets and liabilities (see the trial balance).
7. Prepare a liquidation schedule. Be sure to use the calculated partners' capital balances. Non-cash assets were sold for $350,000.
8. Prepare the liquidation journal entries related to:
a. Sell of non-cash assets on Jan 1
b. Distribution of gain or loss to partners on Jan 1
c. Payment of liabilities on Jan 4
d. Payment by partners (if needed to bring account to zero from a negative balance) on Jan 4
e. Distribute remaining cash to partners on Jan 6
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting And Finance For Lawyers In A Nutshell

Authors: Charles Meyer

7th Edition

1647083001, 9781647083007

More Books

Students also viewed these Accounting questions

Question

What activities do you enjoy when you are not working?

Answered: 1 week ago