Asked by Teyanna Meshae on May 13, 2024
Verified
The Zhuzer Company at December 31 has cash $50000 noncash assets $250000 liabilities $138000 and the following capital balances: Zhu $112000 and Zerkel $50000. The firm is liquidated and $265000 in cash is received for the noncash assets. Zhu and Zerkel income ratios are 60% and 40% respectively.
Instructions
Prepare the entries to record:
(a) The sale of noncash assets.
(b) The allocation of the gain or loss on liquidation to the partners.
(c) Payment of creditors.
(d) Distribution of cash to the partners.
Liquidation
The process of closing a business and distributing its assets to claimants, typically when the company is insolvent.
Noncash Assets
Noncash Assets are assets that are physical or intangible properties owned by a company that are not in the form of cash or easily convertible into cash.
Income Ratios
Financial metrics that compare different aspects of a company's income to its revenues, expenses, or other financial metrics, to assess its profitability.
- Understand the process and accounting entries related to the liquidation of a partnership.
Verified Answer
Cash 265,000 Noncash Assets 250,000 Gain on Realization 15,000\begin{array}{llr} \text { Cash } &265,000\\ \text { Noncash Assets } &&250,000\\ \text { Gain on Realization } &&15,000\end{array} Cash Noncash Assets Gain on Realization 265,000250,00015,000
(b)
Gain on Realization15,000 Zhu, Capital ($15,000×60%) 9,000 Zerkel, Capital ($15,000×40%)6,000\begin{array}{llr} \text { Gain on Realization} &15,000\\ \text { Zhu, Capital \( (\$ 15,000 \times 60 \%) \) } &&9,000\\ \text { Zerkel, Capital \( (\$ 15,000 \times 40 \%) \)} &&6,000\end{array} Gain on Realization Zhu, Capital ($15,000×60%) Zerkel, Capital ($15,000×40%)15,0009,0006,000
(c)
Liabilities 138,000 Cash138,000\begin{array}{llr} \text { Liabilities } &138,000\\ \text { Cash} &&138,000\\\end{array} Liabilities Cash138,000138,000
(d)
Zhu, Capital 121,000 Zerkel, Capital 56,000 Cash 177,000\begin{array}{llr} \text { Zhu, Capital } &121,000\\ \text { Zerkel, Capital } &56,000\\ \text { Cash } &&177,000\end{array} Zhu, Capital Zerkel, Capital Cash 121,00056,000177,000
Learning Objectives
- Understand the process and accounting entries related to the liquidation of a partnership.
Related questions
The ABC Partnership Is to Be Liquidated and You Have ...
The HK Partnership Is Liquidated When the Ledger Shows Henson ...
In Liquidating a Partnership It Is Necessary to Convert ______________ ...
The Last Step in a Partnership Liquidation Is to Apply ...
When a Partnership Is Liquidated, the Assets Are Sold and ...