Quick, Drake, and Sage share income and loss in a 3:2:1 ratio. The partners have decided to liquidate their partnership. On the day of liquidation their balance sheet appears as follows.
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QUICK, DRAKE,AND SAGE Balance Sheet May 31 |
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Assets |
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Liabilities and Equity |
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Cash |
$ 90,400 |
Accounts payable |
$122,750 |
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Inventory |
268,600 |
Quick, Capital |
46,500 |
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Drake, Capital |
106,250 |
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Total assets |
$359,000 |
Sage, Capital |
83,500 |
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Total liabilities and equity |
$359,000 |
Required
Prepare journal entries for (a) the sale of inventory, (b) the allocation of its gain or loss, (c) the payment of liabilities at book value, and (d) the distribution of cash in each of the following separate cases: Inventory is sold for (1) $300,000; (2) $250,000; (3) $160,000 and any partners with capital deficits pay in the amount of their deficits; and (4) $125,000 and the partners have no assets other than those invested in the partnership. (Round to the nearest dollar.)