Matt, Sarah and Hank who are partners in the MSH Co. share income and loss in a 2:2:1 ratio. They plan to liquidate their partnership on October 1. At liquidation, their balance sheet appears as follows.

Prepare journal entries for:

A. The sale of the land and equipment sold as a package for $500,000

B. The allocation of the gain or loss.

C. The payment of the liabilities

D. The distribution of cash to the individual partners.

MSH Company Balance Sheet January 31 Liabilities and Equity Assets Cash Equipment Land $221,500 210,000 178,000 140.500 $750,000 $200,000 Accounts Payable 200,000 Masco, Capital 350,000 Short, Capital Henderson, Capital Total assets $750,000 Total liabilities and equity