prepare the entries to record the transactions 618598
The partners in Newman Company decide to liquidate the firm when the balance sheet shows the following.
|
NEWMAN COMPANY Balance Sheet April 30, 2014 |
|||
|
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) |
Salaries and wages payable |
2,500 |
|
Inventory |
35,000 |
Mallory, capital |
28,000 |
|
Equipment |
20,000 |
Bosco, capital |
13,650 |
|
Accumulated depreciation—equipment |
(8,000) |
Renteria, capital |
5,850 |
|
$100,000 |
$100,000 |
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The partners share income and loss 5:3:2. During the process of liquidation, the transactions below were completed in the following sequence.
- A total of $55,000 was received from converting noncash assets into cash.
- Gain or loss on realization was allocated to partners.
- Liabilities were paid in full.
- 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.