The partners in RSP Company decide to liquidate the firm when the statement of financial position shows the following.

The partners share income and loss 5:3:2. During the process of liquidation, the following transactions were completed in the following sequence.
1. A total of ‚¬50,000 was received from converting non-cash assets into cash.
2. Gain or loss on realization was allocated to partners.
3. Liabilities were paid in full.
4. M. Posada paid his capital deficiency.
5. Cash was paid to the partners with credit balances.
Instructions
(a) Prepare the entries to record the transactions.
(b) Post to the cash and capital accounts.
(c) Assume that Posada is unable to pay the capital deficiency.
(1) Prepare the entry to allocate Posada's debit balance to Ruscoe and Sorenson.
(2) Prepare the entry to record the final distribution of cash.

Transcribed Image Text:

RSP COMPANY Statement of Financial Position May 31, 2017 Assets Equity and Liabilities 34,500 S. Ruscoe, capital 21,000 J. Sorenson, capital Inventory Equipment Accumulated depreciation-equipment (5,500) M. Posada, capital Accounts receivable Allowance for doubtful Cash 36,000 19,000 1,200 27,000 12,500 3,800 99,500 23,000 (1,000) 27,500 99,500 Accounts payable Notes payable Salaries and wages payable accounts Total Total