Liquidation%20of%20Partnerships

1
Liquidation of Partnerships
2
Table of Contents

• I. The Case Problem
• II. The Handout
• III. The Solution for Part (a)
• IV. The Journal Entries for Part (a)
• V. The Solution for Part (b)
• VI. The Journal Entries for Part (b)

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3
The Case
PrinterFriendlyVersion
Oh, Are, and Ewe are partners who share profits
and losses 212. A summary of the balances in
the accounts in their general ledger at the time
they decide to liquidate their partnership is as
follows
Cash 8,100
Non-Cash Assets 70,600
Liabilities 27,500
Oh, Capital 23,300
Are, Capital 12,100
Ewe, Capital 15,800
Totals 78,700 78,700
Instructions Make the entries necessary to
liquidate their partnership (1) in terms of the
accounting equation, and (2) as general journal
entries assuming the non-cash assets are sold for
(a) 70,600, and (b) 20,600, and the deficient
partner subsequently pays 2,700 of his
deficiency.
Return to TOC
4
The Handout

• Two pages follow
• One for part (a)
• Another for part (b)

Return to TOC
5
Principles of Financial and Managerial Accounting
IILiquidation of Partnerships(a)
Name ________________________________
PrinterFriendlyVersion
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a
balances
b
balances
c
balances





Return to TOC
6
Principles of Financial and Managerial Accounting
IILiquidation of Partnerships(b)
PrinterFriendlyVersion
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a
balances
b
balances
c
balances
d
balances
e
balances

Return to TOC
7
The Solution Part (a)
Return to TOC
8
a) Assuming the non-cash assets were sold for
70,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization
balances
b
balances
c 23,300 12,100 -15,800
balances





9
a) Assuming the non-cash assets were sold for
70,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 70,600
balances
b
balances
c 23,300 12,100 -15,800
balances





10
a) Assuming the non-cash assets were sold for
70,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 70,600 -70,600
balances
b
balances
c 23,300 12,100 -15,800
balances





11
a) Assuming the non-cash assets were sold for
70,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 70,600 -70,600
balances 78,700 0 27,500 23,300 12,100 15,800
b
balances
c 23,300 12,100 -15,800
balances





Bring down ALL the new balances.
12
a) Assuming the non-cash assets were sold for
70,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 70,600 -70,600
balances 78,700 0 27,500 23,300 12,100 15,800
b
balances
c 23,300 12,100 -15,800
balances





The steps in liquidation are (essentially) always
the same.
13
a) Assuming the non-cash assets were sold for
70,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 70,600 -70,600
balances 78,700 0 27,500 23,300 12,100 15,800
b pay creditors
balances
c 23,300 12,100 -15,800
balances





14
a) Assuming the non-cash assets were sold for
70,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 70,600 -70,600
balances 78,700 0 27,500 23,300 12,100 15,800
b pay creditors -27,500 -27,500
balances
c 23,300 12,100 -15,800
balances





15
a) Assuming the non-cash assets were sold for
70,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 70,600 -70,600
balances 78,700 0 27,500 23,300 12,100 15,800
b pay creditors -27,500 -27,500
balances 51,200 0 0 23,300 12,100 15,800
c 23,300 12,100 -15,800
balances





Bring down ALL the new balances.
16
a) Assuming the non-cash assets were sold for
70,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 70,600 -70,600
balances 78,700 0 27,500 23,300 12,100 15,800
b pay creditors -27,500 -27,500
balances 51,200 0 0 23,300 12,100 15,800
c 23,300 12,100 -15,800
balances





The steps in liquidation are (essentially always
the same.
17
a) Assuming the non-cash assets were sold for
70,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 70,600 -70,600
balances 78,700 0 27,500 23,300 12,100 15,800
b pay creditors -27,500 -27,500
balances 51,200 0 0 23,300 12,100 15,800
c pay partners -51,200 -23,300 12,100 -15,800
balances





18
a) Assuming the non-cash assets were sold for
70,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 70,600 -70,600
balances 78,700 0 27,500 23,300 12,100 15,800
b pay creditors -27,500 -27,500
balances 51,200 0 0 23,300 12,100 15,800
c pay partners -51,200 -23,300 12,100 -15,800
balances 0 0 0 0 0 0





19
a) Assuming the non-cash assets were sold for
70,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 70,600 -70,600
balances 78,700 0 27,500 23,300 12,100 15,800
b pay creditors -27,500 -27,500
balances 51,200 0 0 23,300 12,100 15,800
c pay partners -51,200 -23,300 12,100 -15,800
balances 0 0 0 0 0 0





Make appropriate general journal entries based on
this analysis.
20
a) Assuming the non-cash assets were sold for
70,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 70,600 -70,600
balances
b
balances
c 23,300 12,100 -15,800
balances





Date Account Titles Debit Credit
Cash 70,600
Non-Cash Assets 70,600

21
a) Assuming the non-cash assets were sold for
70,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 70,600 -70,600
balances 78,700 0 27,500 23,300 12,100 15,800
b pay creditors -27,500 -27,500
balances
c 23,300 12,100 -15,800
balances





Date Account Titles Debit Credit
Liabilities 27,500
Cash 27,500

22
a) Assuming the non-cash assets were sold for
70,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 70,600 -70,600
balances 78,700 0 27,500 23,300 12,100 15,800
b pay creditors -27,500 -27,500
balances 51,200 0 0 23,300 12,100 15,800
c pay partners -51,200 -23,300 12,100 -15,800
balances





Date Account Titles Debit Credit
Oh, Capital 23,300
Are, Capital 12,100
Ewe, Capital 15,800
Cash 51,200
23
The Solution Part (b)
Return to TOC
24
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a
balances
b
balances
c
balances
d
balances
e
balances

25
b) Assuming the non-cash assets were sold for
20,600.
The 20,600 cash for which the assets were sold
increases cash.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances
b
balances
c
balances
d
balances
e
balances

26
b) Assuming the non-cash assets were sold for
20,600.
??? Should non-cash assets be reduced
by 20,600 (to keep the equation in balance
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600
balances 28,700 0 3,300 2,100 lt4,200gt
b
balances
c
balances
d
balances
e
balances

??? Or should non-cash assets be
reduced by 70,600 because all were sold?
27
b) Assuming the non-cash assets were sold for
20,600.
ALL of the non-cash assets were sold. Non-cash
assets should be reduced by 70,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 0 3,300 2,100 lt4,200gt
b
balances
c
balances
d
balances
e
balances

28
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 0 3,300 2,100 lt4,200gt
b
balances
c
balances
d
balances
e
balances

So when 70,600 of assets were sold for 20,600,
how did we do? Gain or loss?
29
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 0 3,300 2,100 lt4,200gt
b
balances
c
balances
d
balances
e
balances

We incurred a 50,000 loss which must be
allocated to the partners according to their
AGREEMENT.
30
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 3,300 2,100 lt4,200gt
b
balances
c
balances
d
balances
e
balances

Ohs share of the loss is 2/5 of the 50,000
total.
31
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 3,300 2,100 lt4,200gt
b
balances
c
balances
d
balances
e
balances

Ares share of the loss is 1/5 of the 50,000
total.
32
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 3,300 2,100 lt4,200gt
b
balances
c
balances
d
balances
e
balances

Ewes share of the loss is 2/5 of the 50,000
total.
33
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 27,500 3,300 2,100 lt4,200gt
b
balances
c
balances
d
balances
e
balances

Then bring down all the new balances.
34
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 27,500 3,300 2,100 lt4,200gt
b
balances
c
balances
d
balances
e
balances

This negative balance is called a deficiency.
This partner did not have enough capital to
absorb his share of the loss. The balances of
the other two capital accounts are credit yet
this balance is DEBIT.
35
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 27,500 3,300 2,100 lt4,200gt
b pay creditors -27,500 -27,500
balances
c
balances
d
balances
e
balances

The creditors are paid what they want and deserve.
36
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 27,500 3,300 2,100 lt4,200gt
b pay creditors -27,500 -27,500
balances 1,200 0 0 3,300 2,100 lt4,200gt
c
balances
d
balances
e
balances

Bring down all the new balances.
37
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 27,500 3,300 2,100 lt4,200gt
b pay creditors -27,500 -27,500
balances 1,200 0 0 3,300 2,100 lt4,200gt
c
balances
d
balances
e
balances

This amount of cash is available to be
distributed to the partners.
38
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 27,500 3,300 2,100 lt4,200gt
b pay creditors -27,500 -27,500
balances 1,200 0 0 3,300 2,100 lt4,200gt
c
balances
d
balances
e
balances

But these two partners have claims greater than
the amount of cash available.
39
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 27,500 3,300 2,100 lt4,200gt
b pay creditors -27,500 -27,500
balances 1,200 0 0 3,300 2,100 lt4,200gt
c
balances
d
balances
e
balances

And this partner does not deserve to share in the
distribution. His deficiency means he actually
OWES the p/s rather than the p/s owing him.
40
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 27,500 3,300 2,100 lt4,200gt
b pay creditors -27,500 -27,500
balances 1,200 0 0 3,300 2,100 lt4,200gt
c
balances
d
balances
e
balances

So how should the remainingcash be
distributed?
41
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 27,500 3,300 2,100 lt4,200gt
b pay creditors -27,500 -27,500
balances 1,200 0 0 3,300 2,100 lt4,200gt
c
balances
d
balances
e
balances

Two partners deserve some of the cash one does
not.
42
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 27,500 3,300 2,100 lt4,200gt
b pay creditors -27,500 -27,500
balances 1,200 0 0 3,300 2,100 lt4,200gt
c
balances
d
balances
e
balances

Skip the transaction line and determine the
desired balances instead.
43
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 3,300 2,100 lt4,200gt
b pay creditors -27,500 -27,500
balances 1,200 0 0 3,300 2,100 lt4,200gt
c
balances
d
balances
e
balances

Three things could potentially happen to the
deficiency. He could pay 1) all, 2) some, or 3)
none of the deficiency.
The desired balances are determined as if the
worse thing happens if the deficient partner
pays NONE of his deficiency.
44
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 27,500 3,300 2,100 lt4,200gt
b pay creditors -27,500 -27,500
balances 1,200 0 0 3,300 2,100 lt4,200gt
c
balances
d
balances
e
balances

The potential loss should be allocated to the
partners in their profit and loss sharing
agreement. The agreement was 212, but since
the deficient partner is not participating, the
ratio becomes 21.
45
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 27,500 3,300 2,100 lt4,200gt
b pay creditors -27,500 -27,500
balances 1,200 0 0 3,300 2,100 lt4,200gt
c
balances
d
balances
e
balances

Two-thirds of the loss might be allocated to Oh
if Ewe does not pay anything 4,200 x 2/3 is
2,800.
46
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 27,500 3,300 2,100 lt4,200gt
b pay creditors -27,500 -27,500
balances 1,200 0 0 3,300 2,100 lt4,200gt
c
balances 2,800
d
balances
e
balances

One-third of the loss might have be to allocated
to Are if Ewe does not pay 4,200 x 1/3 is
1,400.
47
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 27,500 3,300 2,100 lt4,200gt
b pay creditors -27,500 -27,500
balances 1,200 0 0 3,300 2,100 lt4,200gt
c
balances 2,800 1,400
d
balances
e
balances

These are their DESIRED capital balances.
48
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 27,500 3,300 2,100 lt4,200gt
b pay creditors -27,500 -27,500
balances 1,200 0 0 3,300 2,100 lt4,200gt
c pay partners - 1,200
balances 2,800 1,400
d
balances
e
balances

The difference between their present
balanceand their desired balance is the amount
of cash they are entitled to receive.
49
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 27,500 3,300 2,100 lt4,200gt
b pay creditors -27,500 -27,500
balances 1,200 0 0 3,300 2,100 lt4,200gt
c pay partners - 1,200
balances 2,800 1,400
d
balances
e
balances

3,300 - 2,800 500
50
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 27,500 3,300 2,100 lt4,200gt
b pay creditors -27,500 -27,500
balances 1,200 0 0 3,300 2,100 lt4,200gt
c pay partners - 1,200 - 500
balances 2,800 1,400
d
balances
e
balances

3,300 - 2,800 500
51
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 27,500 3,300 2,100 lt4,200gt
b pay creditors -27,500 -27,500
balances 1,200 0 0 3,300 2,100 lt4,200gt
c pay partners - 1,200 500
balances 2,800 1,400
d
balances
e
balances

The difference between their present
balanceand their desired balance is the amount
of cash they are entitled to receive.
52
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 3,300 2,100 lt4,200gt
b pay creditors -27,500 -27,500
balances 1,200 0 0 3,300 2,100 lt4,200gt
c pay partners - 1,200
balances 2,800 1,400
d
balances
e
balances

2,100 - 1,400 700
53
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 3,300 2,100 lt4,200gt
b pay creditors -27,500 -27,500
balances 1,200 0 0 3,300 2,100 lt4,200gt
c pay partners - 1,200 700
balances 2,800 1,400
d
balances
e
balances

2,100 - 1,400 700
54
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 27,500 3,300 2,100 lt4,200gt
b pay creditors -27,500 -27,500
balances 1,200 0 0 3,300 2,100 lt4,200gt
c pay partners - 1,200 500 700
balances 2,800 1,400
d
balances
e
balances

55
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 27,500 3,300 2,100 lt4,200gt
b pay creditors -27,500 -27,500
balances 1,200 0 0 3,300 2,100 lt4,200gt
c pay partners - 1,200 - 500 700
balances 0 0 0 2,800 1,400 lt4,200gt
d
balances
e
balances

56
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 27,500 3,300 2,100 lt4,200gt
b pay creditors -27,500 -27,500
balances 1,200 0 0 3,300 2,100 lt4,200gt
c pay partners - 1,200 - 500 700
balances 0 0 0 2,800 1,400 lt4,200gt
d
balances
e
balances

Now these two partners should wait patiently
hoping the deficient partner will pay all or some
of his deficiency. But they are also prepared if
he pays none.
57
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 27,500 3,300 2,100 lt4,200gt
b pay creditors -27,500 -27,500
balances 1,200 0 0 3,300 2,100 lt4,200gt
c pay partners - 1,200 - 500 700
balances 0 0 0 2,800 1,400 lt4,200gt
d
balances
e
balances

The problem says the deficient partner pays
2,700 of his deficiency.
58
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 27,500 3,300 2,100 lt4,200gt
b pay creditors -27,500 -27,500
balances 1,200 0 0 3,300 2,100 lt4,200gt
c pay partners - 1,200 - 500 700
balances 0 0 0 2,800 1,400 lt4,200gt
d received cash 2,700 2,700
balances
e
balances

Cash of 2,700 is received from the deficient
partner.
59
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 27,500 3,300 2,100 lt4,200gt
b pay creditors -27,500 -27,500
balances 1,200 0 0 3,300 2,100 lt4,200gt
c pay partners - 1,200 - 500 700
balances 0 0 0 2,800 1,400 lt4,200gt
d received cash 2,700 2,700
balances 2,700 0 0 2,800 1,400 lt1,500gt
e
balances

New balances are determined in each column.
60
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 3,300 2,100 lt4,200gt
b pay creditors -27,500 -27,500
balances 1,200 0 0 3,300 2,100 lt4,200gt
c pay partners - 1,200 - 500 700
balances 0 0 0 2,800 1,400 lt4,200gt
d received cash 2,700 2,700
balances 2,700 0 0 2,800 1,400 lt1,500gt
e
balances

Again there is money to be distributed to the
partners, and the process repeats.
61
b) Assuming the non-cash assets were sold for
20,600.
ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY ASSETS LIABILITIES OWNERS EQUITY
Description Cash Non-Cash Liabilities Oh (2) Are (1) Ewe (2)
beg bal 8,100 70,600 27,500 23,300 12,100 15,800
a realization 20,600 -70,600 -20,000 -10,000 -20,000
balances 28,700 0 27,500 3,300 2,100 lt4,200gt
b pay creditors -27,500 -27,500
balances 1,200 0 0 3,300 2,100 lt4,200gt
c pay partners - 1,200 - 500 700
balances 0 0 0 2,800 1,400 lt4,200gt
d received cash 2,700 2,700
balances 2,700 0 0 2,800 1,400 lt1,500gt
e pay partners - 2,700 - 1,800 900
balances 0 0 0 1,000 500 lt1,500gt