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Determine the cash balance before liquidation

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Jem and Roy are partners sharing profit in the ratio of 1:2 respectively. At liquidation point the liabilities and owners equity are as follows: Accounts Payable, 60,000; Jem, Capital, 30,000; Roy, Capital, 10,000. Non cash assets amounted to 80,000. After the sale the total cash for distribution to creditors and partners amounted to 70,000

Problem (a) Determine the cash balance before liquidation using the accounting equation.

Problem (b) Compare cash balance before liquidation against cash balance after the sale to arrive at the proceeds from the sale

Problem (c) Determine the loss on realization by comparing sales proceeds and the book value of the non-cash assets sold

Problem (d) Prepare the statement of liquidation, assume Jem and Roy are personally solvent

Problem (e) Prepare entries

Reference no: EM132837957

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