Problem 12-03A a-c (Video)

The partners in Sunland Company decide to liquidate the firm when the balance sheet shows the following.

Sunland Company Balance Sheet May 31, 2020
Assets					Liabilities and Owners Equity
Cash		$29,300			Notes payable		$13,500
Accounts receivable		24,600			Accounts payable		27,300
Allowance for doubtful accounts		(1,300	)		Salaries and wages payable		3,800
Inventory		34,900			A. Jamison, capital		32,500
Equipment		20,600			S. Moyer, capital		22,850
Accumulated depreciationequipment		(5,900	)		P. Roper, capital		2,250
		$102,200					$102,200

The partners share income and loss 5:3:2. During the process of liquidation, the following transactions were completed in the following sequence.

1.		A total of $55,650 was received from converting noncash assets into cash.
2.		Gain or loss on realization was allocated to partners.
3.		Liabilities were paid in full.
4.		P. Roper paid his capital deficiency.
5.		Cash was paid to the partners with credit balances.

Assume that Roper is unable to pay the capital deficiency.

(1)		Prepare the entry to allocate Ropers debit balance to Jamison and Moyer.
(2)		Prepare the entry to record the final distribution of cash.

2. At the end of its first year of operations on December 31, 2020, Wildhorse Companys accounts show the following.

Partner		Drawings		Capital
Art Niensted		$22,800		$46,600
Greg Bolen		13,700		36,500
Krista Sayler		12,000		23,500

The capital balance represents each partners initial capital investment. Therefore, net income or net loss for 2020 has not been closed to the partners capital accounts. To record the division of net income for the year 2020 under each of the following independent assumptions.

1.		Net income is $28,000. Income is shared 6:3:1.
2.		Net income is $39,000. Niensted and Bolen are given salary allowances of $15,200 and $10,300, respectively. The remainder is shared equally.
3.		Net income is $18,700. Each partner is allowed interest of 10% on beginning capital balances. Niensted is given a $14,040 salary allowance. The remainder is shared equally

Prepare a schedule showing the division of net income under assumption (3) above.