Problem 12-6A Liquidation of a partnership LO P5

Kendra, Cogley, and Mei share income and loss in a 3:2:1 ratio. The partners have decided to liquidate their partnership. On the day of liquidation their balance sheet appears as follows.

KENDRA, COGLEY, AND MEI Balance Sheet May 31
Assets				Liabilities and Equity
Cash	$	103,900		Accounts payable	$	258,000
Inventory		537,600		Kendra, Capital		76,700
				Cogley, Capital		172,575
				Mei, Capital		134,225
Total assets	$	641,500		Total liabilities and equity	$	641,500

Required: For each of the following scenarios, complete the schedule allocating the gain or loss on the sale of inventory. Prepare journal entries to record the below transactions. (Do not round intermediate calculations. Amounts to be deducted or Losses should be entered with a minus sign. Round your final answers to the nearest whole dollar.) (1) Inventory is sold for $608,400. (2) Inventory is sold for $469,200. (3) Inventory is sold for $358,800 and any partners with capital deficits pay in the amount of their deficits. (4) Inventory is sold for $298,800 and the partners have no assets other than those invested in the partnership.

Complete this question by entering your answers in the tabs below.

Required 1 Inventory

Required 1 GJ

Required 2 Inventory

Required 2 GJ

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 $608,400.

Step 1) Determination of Gain (Loss)
Proceeds from the sale of inventory
Inventory cost
Gain on sale
Step 2) Allocation of the Gain (Loss) to the Partners.
		KENDRA		COGLEY		MEI	Total
Initial capital balances		$76,700		$172,575		$134,225	$383,500
Allocation of gains (losses)	3 / 6		2 / 6		1 / 6		0
Capital balances after gains (losses)		$76,700		$172,575		$134,225	$383,500

1. Record the sale of inventory.

2. Allocate the gain(loss) on the sale of inventory to the partners.

3. Record the payment of the liabilities.

4. Record the disbursement of the remaining cash to the partners.

Complete the schedule allocating the gain or loss on the sale of inventory is $469,200.

Complete this question by entering your answers in the tabs below.

Complete the schedule allocating the gain or loss on the sale of inventory is $469,200.

Step 1) Determination of Gain (Loss)
Proceeds from the sale of inventory		$469,200
Inventory cost
Step 2) Allocation of the gain (Loss) to the Partners.
		KENDRA		COGLEY		MEI	Total
Initial capital balances		$76,700		$172,575		$134,225	$383,500
Allocation of gains (losses)							0
Capital balances after gains (losses)		$76,700		$172,575		$134,225	$383,500

1. Record the sale of inventory.

2. Allocate the gain(loss) on the sale of inventory to the partners.

3. Record the payment of the liabilities.

4. Record the disbursement of the remaining cash to the partners.

Complete the schedule allocating the gain or loss on the sale of inventory is $358,800 and any partners with capital deficits pay in the amount of their deficits.

Step 1) Determination of Gain (Loss)
Proceeds from the sale of inventory		$358,800
Inventory cost
Step 2) Allocation of the Gain (Loss) to the Partners.
		KENDRA		COGLEY		MEI	Total
Initial capital balances		$76,700		$172,575		$134,225	$383,500
Allocation of gains (losses)							0
Capital balances after gains (losses)		$76,700		$172,575		$134,225	$383,500

1. Record the sale of inventory.

2. Allocate the gain(loss) on the sale of inventory to the partners.

3. The partner(s) with deficit balances repay the amount of their deficit(s).

4. Record the payment of the liabilities.

5. Record the disbursement of the remaining cash to the partners.

Complete the schedule allocating the gain or loss on the sale of inventory $298,800 and the partners have no assets other than those invested in the partnership.

Step 1) Determination of gain (loss)
Proceeds from the sale of inventory		$298,800
Inventory Cost
Step 2) Allocation of the gain (loss) to the partners and distribution of deficit(s)
		KENDRA		COGLEY		MEI	Total
Initial capital balances		$76,700		$172,575		$134,225	$383,500
Allocation of gains (losses)							0
Capital balances after gains (losses)		76,700		172,575		134,225	383,500
Allocation of deficit balance							0
Capital balances after deficit allocation		$76,700		$172,575		$134,225	$383,500

1. Record the sale of inventory for $298,800.

2. Record the allocation of the gain or loss on the sale of inventory to the partners.

3. Assuming that the partners have no assets other than those invested, allocate any partner(s) deficit balances to the remaining partners.

4. Record the payment of the liabilities.

5. Record the disbursement of the remaining cash to the partner(s).