The partners in Apache Company decide to liquidate the firm when the balance sheet shows the following.
|
APACHE COMPANY |
|||
|
Assets |
Liabilities and Owners’ Equity |
||
|
Cash |
$30,000) |
Notes payable |
$20,000 |
|
Accounts receivable |
25,000) |
Accounts payable |
30,000 |
|
Allowance for doubtful accounts |
(2,000) |
Wages payable |
2,500 |
|
Merchandise inventory |
35,000) |
Scottie, Capital |
28,000 |
|
Equipment |
20,000) |
Spock, Capital |
13,650 |
|
Accumulated depreciation—equipment |
(8,000) |
Kirk, Capital |
5,850 |
|
Total |
$100,000) |
Total |
$100,000 |
The partners share income and loss 5:3:2. During the process of liquidation, the transactions below were completed in the following sequence.
1. A total of $57,000 was received from converting noncash assets into cash.
2. Gain or loss on relization was allocated to partners.
3. Liabilities were paid in full.
4. Cash was paid to the partners with credit balances.
Instructions
(a) Prepare a schedule of cash payments.
(b) Prepare the entries to record the transactions.
(c) Post to the cash and capital accounts.