Reference no: EM132220420

Problem - The partnership of Adcock, Villa, and Davis decide to liquidate after all temporary accounts have been closed out and the partnership balance sheet is as follows:

Adcock, Villa , Davis & Company Balance Sheet February 2, 2018
Assets
Cash	$60,000
Accounts Receivable	40,000
Inventory	100,000
Plant Assets (Net of Depreciation)	200,000
Total Assets	$400,000
Liabilities
Accounts Payable	$120,000
Partners' Equity
Adcock Capital	55,000
Villa Capital	125,000
Davis Capital	100,000
Total Liabilities & Partner Equity	$400,000

Required - Prepare Journal entries and ledger accounts ("T" - Accounts) for the following activities, allocations of profit/loss, and distribution of cash to each partner on liquidation under the following two assumptions.

1. The following events took place during liquidation:

A. Collected $35,100 of accounts receivable, the remaining is uncollectible.

B. The inventory was sold for $110,000 cash.

C. The plant assets were sold for $90,100. Plant assets have a historical cost of $450,000 and $250,000 of accumulated depreciation.

Profits and losses are allocated Adcock, Villa, and Davis in a 3:3:4 ratios.

2. In the alternative to #1 above, assume account receivable same as above the inventory was sold for $40,100 and plant assets are sold for $75,000. Also assume, any partner with a deficit capital account does not have personal funds to cover the deficiency.