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AAAB ACAD AE AF P12-3A. The partners in River Song Company decide to liquidate the firm when the balance sheet shows the following. River Song Company Balance Sheet at December 31, 2012 Assets $usd 000 $ 27,500.0 34,500.0 current assets Cash Inventory Accounts Receivable Less: Allowance for Doubtful Accounts PrePaid Insurance Total current assets 25,000.0 (1,000.0) $ 86,000.0 Long-term Investments (LTI) Investments property, plant, & equipment Fouinment Accumulated Depreciation-Equipment 21.000.0 (5,500.0) 15,500.0 $ 101,500.0 Total Assets Liabilities & Owner's Equity current liabilities Notes Payable (in 2013) Accounts Payable Salary & Wages Payable Total current liabilities $ 13,500.0 27,000.0 4.000.0 $ 44,500.0 Long Term Liabilities Notes Payable (after 2013) Long Term Debt Total long term liabilities Total Liabilities $ 44.500.0 Owner's Equity A Mangold Capital 5. Otis Capital P. Tyler Capital Owner's Capital $ 33,000.0 21000.0 3,000.0 $57,000.0 Total Liabilities & Owner's Equity $ 101.500.0 Alignment Number Styles I AA AB AC AD AE AF AG 1. River Song sells the noncash assets 1. A total of $55,000 was received from converting nonCash assets into Cash. (accounts receivable, Inventory, and equipment) for $55,000. The book value of these assets is $74,000 ($25,000 - $1,000+ $34,500 + $ 21,000 - $5,500). Thus, River Song realizes a loss of $19,000 on the sale. The entry is above: NonCash Assets (net..................... $74,000 Sale Proceeds ...................... 55,000 Loss on Sale of nonCash Assets..... $19,000 2. Gain or Loss on realization was allocated to partners. 2. River Song allocates the $19,000 loss on realization to the partners on the basis of their income ratios, which are 5:3:2. The entry is: 12/31/12 Loss on Realization 50.0% A Mangold Capital 301 30.0% S. Otis Capital 301 20.0% P. Tyler Capital (to allocate loss to partners' capital accounts) 301 3. Liabilities were paid in full. 3. Partnership Liabilities consist of Notes Payable $13,500 and Accounts Payable $27,000, Salary & Wages Payable 4,000. River Song pays creditors in full by a cash payment of $44,500. The entry is: 12/31/12 Notes Payable 200 Accounts Payable 201 Salary & Wages Payable 101 to record payment of partnership liabilities) Cash Merge & Center - $ % 8 % Conditional Format as Formatting Table Styles Cell Styles Inse Alignment Number Y AA ABAC I AE AF AG PAYMENT OF DEFICIENCY If the partner with the capital deficiency pays the amount owed the partnership, the deficiency is eliminated. To illustrate, assume that P. Tyler pays $800 to the partnership. The entry is: 12/31/12 Cash 101 P. Tyler Capital (to record payment of capital deficiency by Tyler) 5. Cash was paid to the partners with credit balances. River Song records the distribution of cash as follows. 12/31/12 301 A. Mangold Capital 301 S. Otis Capital Cash 101 (to record distribution of cash to partners) (b) Post to the cash and capital accounts. 101 Cash Explanation date ref Debit Credit Balance 12/31/12 beginning balance 12/31/12 12/31/12 12/31/12 12/31/12 inment Number Styles W X Z AA AB AC AD AE AF AG A. Mangold, Owner's Capita Explanation ref date Debit Credit 301 Balance 1/1/12 balance 1/1/12 12/31/12 closing entry S. Otis, Owner's Capital Explanation ref date Debit Credit Balance 1/1/12 balance 1/1/12 12/31/12 closing entry P. Tyler, Owner's Capital Explanation ref 301 date Debit Credit Balance 1/1/12 balance 1/1/12 12/31/12 dosing entry (c) Assume that Tyler is unable to pay the capital deficiency. (1) Prepare the entry to allocate Tyler's debit balance to Mangold and Otis. 12/31/12 A. Mangold Capital S.Otis Capital P. Tyler Capital (to record write off of capital deficiency 01 (2) Prepare the entry to record the final distribution of cash. 12/31/12 A. Mangold Capital S. Otis Capital P. Tyler Capital Cash fto record distribution of cash to partners AAAB ACAD AE AF P12-3A. The partners in River Song Company decide to liquidate the firm when the balance sheet shows the following. River Song Company Balance Sheet at December 31, 2012 Assets $usd 000 $ 27,500.0 34,500.0 current assets Cash Inventory Accounts Receivable Less: Allowance for Doubtful Accounts PrePaid Insurance Total current assets 25,000.0 (1,000.0) $ 86,000.0 Long-term Investments (LTI) Investments property, plant, & equipment Fouinment Accumulated Depreciation-Equipment 21.000.0 (5,500.0) 15,500.0 $ 101,500.0 Total Assets Liabilities & Owner's Equity current liabilities Notes Payable (in 2013) Accounts Payable Salary & Wages Payable Total current liabilities $ 13,500.0 27,000.0 4.000.0 $ 44,500.0 Long Term Liabilities Notes Payable (after 2013) Long Term Debt Total long term liabilities Total Liabilities $ 44.500.0 Owner's Equity A Mangold Capital 5. Otis Capital P. Tyler Capital Owner's Capital $ 33,000.0 21000.0 3,000.0 $57,000.0 Total Liabilities & Owner's Equity $ 101.500.0 Alignment Number Styles I AA AB AC AD AE AF AG 1. River Song sells the noncash assets 1. A total of $55,000 was received from converting nonCash assets into Cash. (accounts receivable, Inventory, and equipment) for $55,000. The book value of these assets is $74,000 ($25,000 - $1,000+ $34,500 + $ 21,000 - $5,500). Thus, River Song realizes a loss of $19,000 on the sale. The entry is above: NonCash Assets (net..................... $74,000 Sale Proceeds ...................... 55,000 Loss on Sale of nonCash Assets..... $19,000 2. Gain or Loss on realization was allocated to partners. 2. River Song allocates the $19,000 loss on realization to the partners on the basis of their income ratios, which are 5:3:2. The entry is: 12/31/12 Loss on Realization 50.0% A Mangold Capital 301 30.0% S. Otis Capital 301 20.0% P. Tyler Capital (to allocate loss to partners' capital accounts) 301 3. Liabilities were paid in full. 3. Partnership Liabilities consist of Notes Payable $13,500 and Accounts Payable $27,000, Salary & Wages Payable 4,000. River Song pays creditors in full by a cash payment of $44,500. The entry is: 12/31/12 Notes Payable 200 Accounts Payable 201 Salary & Wages Payable 101 to record payment of partnership liabilities) Cash Merge & Center - $ % 8 % Conditional Format as Formatting Table Styles Cell Styles Inse Alignment Number Y AA ABAC I AE AF AG PAYMENT OF DEFICIENCY If the partner with the capital deficiency pays the amount owed the partnership, the deficiency is eliminated. To illustrate, assume that P. Tyler pays $800 to the partnership. The entry is: 12/31/12 Cash 101 P. Tyler Capital (to record payment of capital deficiency by Tyler) 5. Cash was paid to the partners with credit balances. River Song records the distribution of cash as follows. 12/31/12 301 A. Mangold Capital 301 S. Otis Capital Cash 101 (to record distribution of cash to partners) (b) Post to the cash and capital accounts. 101 Cash Explanation date ref Debit Credit Balance 12/31/12 beginning balance 12/31/12 12/31/12 12/31/12 12/31/12 inment Number Styles W X Z AA AB AC AD AE AF AG A. Mangold, Owner's Capita Explanation ref date Debit Credit 301 Balance 1/1/12 balance 1/1/12 12/31/12 closing entry S. Otis, Owner's Capital Explanation ref date Debit Credit Balance 1/1/12 balance 1/1/12 12/31/12 closing entry P. Tyler, Owner's Capital Explanation ref 301 date Debit Credit Balance 1/1/12 balance 1/1/12 12/31/12 dosing entry (c) Assume that Tyler is unable to pay the capital deficiency. (1) Prepare the entry to allocate Tyler's debit balance to Mangold and Otis. 12/31/12 A. Mangold Capital S.Otis Capital P. Tyler Capital (to record write off of capital deficiency 01 (2) Prepare the entry to record the final distribution of cash. 12/31/12 A. Mangold Capital S. Otis Capital P. Tyler Capital Cash fto record distribution of cash to partners