Problem 12-03A a-c (Video) The partners in Pharoah Company decide to liquidate t
ID: 2333779 • Letter: P
Question
Problem 12-03A a-c (Video) The partners in Pharoah Company decide to liquidate the firm when the balance sheet shows the following Pharoah Company Balance Sheet May 31, 2020 Assets Liabilities and Owners' Equity Cash Accounts receivable Allowance for doubtful accounts Inventory Equipment Accumulated depreciation-equipment $13,000 27,400 3,900 33,500 21,600 2,700 $102,100 $28,500 Notes payable 24,700 Accounts payable (1,500) Salaries and wages payable 34,600 A. Jamison, capital 20,800 S. Moyer, capital (5,000) P. Roper, capital $102,100 The partners share income and loss 5:3:2. During the process of liquidation, the following transactions were completed in the following sequence. 1. A total of $52,900 was received from converting noncash assets into cash. 2. Gain or loss on realization was allocated to partners. 3. Liabilities were paid in full 4. P. Roper paid his capital deficiency 5. Cash was paid to the partners with credit balances.Explanation / Answer
1.
Working:
2.
Working:
No. Account Titles and Explanation Debit Credit 1 Cash 52900 Allowance for doubtful accounts 1500 Accumulated depreciation-equipment 5000 Loss on realization 20700 Accounts receivable 24700 Inventory 34600 Equipment 20800 (To record disposal of noncash assets) 2 A. Jamison, Capital (5/10 x $20700) 10350 S. Moyer, Capital (3/10 x $20700) 6210 P. Roper, Capital (2/10 x $20700) 4140 Loss on realization 20700 (To record allocation of loss to partners) 3 Notes payable 13000 Accounts payable 27400 Salaries and wages payable 3900 Cash 44300 (To record payment of liabilities) 4 Cash 1440 P. Roper, Capital 1440 (To record cash brought in for capital deficiency) 5 A. Jamison, Capital 23150 S. Moyer, Capital 15390 Cash 38540 (To record cash distribution to other partners)