1. Irby, Jalisco, and Whitehorse are partners in a video rental business, sharing profits and

losses in a 2:1:1 ratio. Business has decreased due to the number of other rental stores in their area. They decide it would be best to liquidate. Their December 31, 20XX balance sheet information is as follows.

Balance sheet information

Cash $15,000

Video Inventory 75,000

Accounts Payable 25,000

Irby, Capital 25,000

Jalisco, Capital 20,000

Whitehorse, Capital 20,000

Prepare the general journal entries, without explanations, to show: (1) the sale of the

noncash assets; (2) the distribution of the losses or gains; (3) the payment to the creditors; and (4) the final distribution of cash under each of the following independent

assumptions.

a.The video inventory is sold for $63,000.

b.The video inventory is sold for $25,000

c. The video inventory is sold for $20,000 and the partner with the deficit can and

does pay from personal assets.

c.The same assumption as c above, except the partner with the deficit cannot pay.