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PROBLEM 16-1 Simple Liquidation The Discount Partnership is being liquidated. The current balance sheet is shown here. Discount Partnership Balance Sheet 14-Jan-14 Assets Cash $
PROBLEM 16-1 Simple Liquidation | |||||||
The Discount Partnership is being liquidated. The current balance sheet is shown here. | |||||||
Discount Partnership | |||||||
Balance Sheet | |||||||
14-Jan-14 | |||||||
Assets | |||||||
Cash $ 25,000 | |||||||
Other assets 120,000 | |||||||
Total assets $145,000 | |||||||
Liabilities and Partners Equity | |||||||
Accounts payable $ 40,000 | |||||||
Dawson, capital 31,000 | |||||||
Feeney, capital 65,000 | |||||||
Hardin, capital 9,000 | |||||||
Total liabilities and partners equity $145,000 | |||||||
Dawson, Feeney, and Hardin share profits and losses in a 30:40:30 ratio. | |||||||
Required: | |||||||
A. Prepare a schedule of partnership liquidation for each of the following three independent cases. | |||||||
(1) The noncash assets are sold for $60,000, and any partner with a deficit is unable to eliminate any of the | |||||||
deficit. | |||||||
(2) The noncash assets are sold for $60,000, and any partner with a deficit is able to invest cash equal to the | |||||||
amount of the deficit. | |||||||
(3) The noncash assets are sold for $50,000, and any partner with a deficit is able to invest up to $8,000 cash | |||||||
in the partnership. | |||||||
B. Prepare all necessary journal entries for case 2 above. |
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