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Accounting 5 Pages

Accounting For Partnerships

Question

On February 1, 2014, the partnership of M. Burns and P. Arch decided to liquidate  their partnership.

Burns and Arch share income and loss in a ratio shown beside their capital balance.  Just before the liquidation, the partnership balance sheet showed the following:

Burns and Arch Partnership

Balance Sheet

01-Feb-14

Profit 

Assets

Liabilities and Partner's Equity

sharing ratio

 $                 75,000

 $                50,000

                    65,000

                   40,000

2

                  (30,000)

                   20,000

3

 $               110,000

 $             110,000

Additional information:

 $                 15,000

 cash, any gain or loss on the sale is allocated to the partners in their sharing ratio.

The accounts payable are paid and the remaining cash is paid to the two partners.

Assume that any deficiency in a partner's capital account is paid  by the partner

Hint:  Prepare t-accounts for the partners to see if there is a deficiency

Required:

Prepare the entries to record the liquidation of the partnership. 10 marks

Use of cell referencing from the balance sheet, where appropriate 2 marks

Burns, Capital

Arch, Capital

Account Titles

Debit

Credit

Solution

Title: Accounting For Partnerships
Length: 5 pages (275 Words)
Style: N/A

Preview


Burns, Capital 
cash 16,000 Bal b/d40,000
Balance c/f24,000 


 


40,000 
40000

















Arch, Capital 
cash 24,000 Bal b/d20,000 

 Balance c/f4,000 

 


24,000 
24000
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