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

River Song Company

Balance Sheet

May 31, 2014

Assets Liabilities and Owners Equity

Cash$ 27,500 Notes payable$ 13,500

Accounts receivable 25,000 Accounts payable 27,000

Allowance for doubtful accounts( 1,000) Salaries payable 4,000

Inventory 34,500 A. Mangold, Capital 33,000

Equipment 21,000 S.Otis, capital 21,000

Accumulated depreciation( 5,500) P. Tyler, capital 3,000

Total$101,500 Total$101,500

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

1. 1.A total of $55,000 was received from converting noncash assets in cash.
2. 2. Gain or loss on realization was allocated to partners.
3. 3. Liabilities were paid in full.
4. 4. P. Tyler paid his capital deficiency.
5. 5. Cash was paid to the partners with credit balances.

Instructions

1. Prepare the entries to record the transactions.
2. Post to the cash and capital account.