Problem 12-6A Liquidation of a partnership LO P5 Kendra, Cogley, and Mei share income and loss in a 3:2:1 ratio (in ratio form: Kendra, 3/6; Cogley, 2/6; and Mei, 1/6). The partners have decided to liquidate their partnership. On the day of liquidation, their balance sheet appears as follows. Balance Sheet Assets Liabilities Cash $ 103,600 Accounts payable $ 252,500 Inventory 536,400 Equity Kendra, Capital 77,500 Cogley, Capital 174,375 Mei, Capital 135,625 Total assets $ 640,000 Total liabilities and equity $ 640,000

• Required 3 Inventory
• Required 3 GJ
• Required 4 Inventory
• Required 4 GJ

Complete the schedule allocating the gain or loss on the sale of inventory is $334,200 and partners with deficits pay their deficits in cash.

Step 1) Determination of Gain (Loss)
Proceeds from the sale of inventory		$334,200
Inventory cost
Step 2) Allocation of the Gain (Loss) to the Partners.
		KENDRA		COGLEY		MEI	Total
Initial capital balances		$77,500		$174,375		$135,625	$387,500
Allocation of gains (losses)							0
Capital balances after gains (losses)		$77,500		$174,375		$135,625	$387,500

• Required 3 GJ
• Required 4 Inventory
• Required 4 GJ

Prepare journal entries to record the inventory is sold for $334,200 and partners with deficits pay their deficits in cash.

Journal entry worksheet

• Record the sale of inventory.

Note: Enter debits before credits.

Transaction	General Journal	Debit	Credit
(a)