Bob, Chris, and John decided to liquidate their business partnership. The curren

Question

Bob, Chris, and John decided to liquidate their business partnership. The current capital balance of each is $12,000, $76,000, and $104,000, and they share profit or loss as 1:2:2 respectively. Currently, the partnership has $19,000 in cash, $218,000 in non-cash assets, and owes $45,000 in liabilities.

Make the journal entries for these business transactions:   

a. issued 50,000 share ($10 par value) and received $680,000 in cash

b. Purchased 20,000 Treasury Stocks at $27 each. The stock has a par value of $10

c.To form new partnership, Bob contributed $18,000 cash and Mike gave office equipment worth $16,500

d.15,000 of Treasury Stocks purchased in b. above were sold at $43 each

e. A corporation has 10,000 Preferred Stock (PS) outstanding. The corporation declared cash dividend of $2.19 for each PS and $0.59 for each Common Stock. See a., b., and d. above for outstanding Common Stock

f. The corporation paid dividend declared in e. above

Explanation / Answer

Journal Entries

date

explanation

debit

credit

A-

cash

680000

common stock

500000

additional paid in capital

180000

B-

treasury stock

540000

cash

540000

C-

cash

18500

office building

16500

35000

D-

cash

645000

treasury stock

405000

additional paid in capital-treasury stock

240000

E-

dividend-preferred stock

21900

dividend-common stock

26550

dividend payable-common stock

26550

dividend payable-preferred stock

21900

F-

dividend payable-common stock

26550

dividend payable-preferred stock

21900

cash

48450

Journal Entries

date

explanation

debit

credit

A-

cash

680000

common stock

500000

additional paid in capital

180000

B-

treasury stock

540000

cash

540000

C-

cash

18500

office building

16500

common stock

35000

D-

cash

645000

treasury stock

405000

additional paid in capital-treasury stock

240000

E-

dividend-preferred stock

21900

dividend-common stock

26550

dividend payable-common stock

26550

dividend payable-preferred stock

21900

F-

dividend payable-common stock

26550

dividend payable-preferred stock

21900

cash

48450

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