Sam Bilbo and Edmond Lewis who operate the Shire Partnership have decided to liquidate their business and retire. Sam and Edmond allocate profit and losses on a 3:2 basis, respectively. At December 31, 2020, after all closing entries have been made, the trial balance of the partnership shows the following account balances: The inventory is sold on January 1, 2021 for cash, and the liabilities are paid. Both partners have the resources to cover deficits (if any) in their capital accounts.
Instructions
a) Assuming the inventory is sold for $ 25,000, calculate the balance in each partner's capital account after allocating the gain or loss on sale of inventory and payment of the liabilities. Prepare the entry to record the receipt of cash from, or payment of cash to, each partner to liquidate the partnership.
b) Assuming the inventory is sold for $ 57,000, calculate the balance in each partner's capital account after allocating the gain or loss on sale of inventory and payment of the liabilities. Prepare the entry to record the receipt of cash from, or payment of cash to, each partner to liquidate the partnership.

Question

Sam Bilbo and Edmond Lewis who operate the Shire Partnership have decided to liquidate their business and retire. Sam and Edmond allocate profit and losses on a 3:2 basis, respectively. At December 31, 2020, after all closing entries have been made, the trial balance of the partnership shows the following account balances:  The inventory is sold on January 1, 2021 for cash, and the liabilities are paid. Both partners have the resources to cover deficits (if any) in their capital accounts.
Instructions 
a) Assuming the inventory is sold for $ 25,000, calculate the balance in each partner's capital account after allocating the gain or loss on sale of inventory and payment of the liabilities. Prepare the entry to record the receipt of cash from, or payment of cash to, each partner to liquidate the partnership.
b) Assuming the inventory is sold for $ 57,000, calculate the balance in each partner's capital account after allocating the gain or loss on sale of inventory and payment of the liabilities. Prepare the entry to record the receipt of cash from, or payment of cash to, each partner to liquidate the partnership.

Quizplus · Accepted Answer

The Answer of Sam Bilbo and Edmond Lewis who operate the Shire Partnership have decided to liquidate their business and retire. Sam and Edmond allocate profit and losses on a 3:2 basis, respectively. At December 31, 2020, after all closing entries have been made, the trial balance of the partnership shows the following account balances:  The inventory is sold on January 1, 2021 for cash, and the liabilities are paid. Both partners have the resources to cover deficits (if any) in their capital accounts.
Instructions 
a) Assuming the inventory is sold for $ 25,000, calculate the balance in each partner's capital account after allocating the gain or loss on sale of inventory and payment of the liabilities. Prepare the entry to record the receipt of cash from, or payment of cash to, each partner to liquidate the partnership.
b) Assuming the inventory is sold for $ 57,000, calculate the balance in each partner's capital account after allocating the gain or loss on sale of inventory and payment of the liabilities. Prepare the entry to record the receipt of cash from, or payment of cash to, each partner to liquidate the partnership.

Sam Bilbo and Edmond Lewis Who Operate the Shire Partnership