Sedgwick Company at December 31 has cash $22,800, noncash assets $108,000, liabi
ID: 2453623 • Letter: S
Question
Sedgwick Company at December 31 has cash $22,800, noncash assets $108,000, liabilities $57,800, and the following capital balances: Floyd $43,200 and DeWitt $29,800. The firm is liquidated, and $113,000 in cash is received for the noncash assets. Floyd and DeWitt income ratios are 70% and 30%, respectively. Sedgwick Company now decides to liquidate the partnership. Prepare the entries to record: (Credit account titles are automatically indented when amount is entered. Do not indent manually.) (a) The sale of noncash assets. (b) The allocation of the gain or loss on realization to the partners. (c) Payment of creditors. (d) Distribution of cash to the partners.
Explanation / Answer
**capital of floyd = 43200+3500= 46700
Dewitt = 29800+1500 = 31300
Date Title Debit credit a Cash 113000 non cash asset 108000 Gain on sale of asset 5000 [being non cash asset is sold at gain] b Gain on sale of asset 5000 Floyd capital (5000*.70) 3500 Dewitt capital (5000*.30) 1500 [being gain on asset is distributed among partners) c Liabilities 57800 cash 57800 [being liabilities paid off recorded] d Floyd capital 46700 Dewitt capital 31300 cash 78000 [being cash distributed to partners in capital ratio]