prepare the entries to record the transactions 618598

The partners in Newman Company decide to liquidate the firm when the balance sheet shows the following.

NEWMAN COMPANY Balance Sheet April 30, 2014

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prepare the entries to record the transactions 618598
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Assets

Liabilities and Owners” Equity

Cash

$ 30,000

Notes payable

$ 20,000

Accounts receivable

25,000

Accounts payable

30,000

Allowance for doubtful accounts

(2,000)

Salaries and wages payable

2,500

Inventory

35,000

Mallory, capital

28,000

Equipment

20,000

Bosco, capital

13,650

Accumulated depreciation—equipment

(8,000)

Renteria, capital

5,850

$100,000

$100,000

The partners share income and loss 5:3:2. During the process of liquidation, the transactions below were completed in the following sequence.

  1. A total of $55,000 was received from converting noncash assets into cash.
  2. Gain or loss on realization was allocated to partners.
  3. Liabilities were paid in full.
  4. Cash was paid to the partners with credit balances.

Instructions

(a)Prepare a schedule of cash payments.

(b)Prepare the entries to record the transactions.

(c)Post to the cash and capital accounts.

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