Problem 12-6A Liquidation of a partnership LO P5

Kendra, Cogley, and Mei share income and loss in a 3:2:1 ratio.The partners have decided to liquidate their partnership. On theday of liquidation their balance sheet appears as follows.
  

KENDRA, COGLEY, AND MEI Balance Sheet May 31
Assets				Liabilities and Equity
Cash	$	84,800		Accounts payable	$	252,000
Inventory		538,200		Kendra, Capital		74,200
				Cogley, Capital		166,950
				Mei, Capital		129,850
Total assets	$	623,000		Total liabilities and equity	$	623,000

Required:
For each of the following scenarios, complete the scheduleallocating the gain or loss on the sale of inventory. Preparejournal entries to record the below transactions. (Do notround intermediate calculations. Amounts to be deducted or Lossesshould be entered with a minus sign. Round your final answers tothe nearest whole dollar.)

(1) Inventory is sold for $621,000.
(2) Inventory is sold for $468,000.
(3) Inventory is sold for $329,400 and anypartners with capital deficits pay in the amount of theirdeficits.
(4) Inventory is sold for $240,600 and thepartners have no assets other than those invested in thepartnership.

Complete this question by entering your answers in thetabs below.

• Required 1 Inventory
• Required 1 GJ
• Required 2 Inventory
• Required 2 GJ
• Required 3 Inventory
• Required 3 GJ
• Required 4 Inventory
• Required 4 GJ

Complete the schedule allocating the gain or loss on the sale ofinventory is $329,400 and any partners with capital deficits pay inthe amount of their deficits.

	Step 1) Determination of Gain(Loss) Proceeds from the sale ofinventory $329,400 Inventory cost Gain on sale Step 2) Allocation of the Gain (Loss)to the Partners. KENDRA COGLEY MEI Total Initial capital balances $74,200 $166,950 $129,850 $371,000 Allocation of gains (losses) 0 Capital balances aftergains (losses) $74,200 $166,950 $129,850 $371,000

Prepare journal entries to record the inventory is sold for$329,400 and any partners with capital deficits pay in the amountof their deficits.

No	Transaction	General Journal	Debit	Credit
1	(a)	Cash
		Loss on sale of inventory
		Inventory
2	(b-1)	Kendra, Capital
		Cogley, Capital
		Mei, Capital
		Loss on sale of inventory		208,800
3	(b-2)	Cash
		Kendra, Capital
4	(c)	Accounts payable
		Cash
5	(d)	Cogley, Capital
		Mei, Capital
		Cash

Complete the schedule allocating the gain or loss on the sale ofinventory $240,600 and the partners have no assets other than thoseinvested in the partnership.

Step 1) Determination of gain(loss) Proceeds from the sale ofinventory $240,600 Inventory Cost Step 2) Allocation of the gain (loss)to the partners and distribution of deficit(s) KENDRA COGLEY MEI Total Initial capital balances $74,200 $166,950 $129,850 $371,000 Allocation of gains (losses) 0 Capital balances after gains(losses) 74,200 166,950 129,850 371,000 Allocation of deficit balance 0 Capital balances afterdeficit allocation $74,200 $166,950 $129,850 $371,000

Prepare journal entries to record the inventory is sold for$240,600 and the partners have no assets other than those investedin the partnership.

No	Transaction	General Journal	Debit	Credit
1	(a)	Cash
		Loss on sale of inventory
		Inventory
2	(b-1)	Kendra, Capital
		Cogley, Capital
		Mei, Capital
		Loss on sale of inventory
3	(b-2)	Cogley, Capital
		Mei, Capital
		Kendra, Capital
4	(c)	Accounts payable
		Cash
5	(d)	Cogley, Capital
		Mei, Capital

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