CASE 1: CLOY PARTNERSHIP

Prepare the journal entry to record the initial investment of the partnership. (5 points)

Date Account Description Post. Ref Dr Cr

1/1/2018 Cash 20,000.00
Merchandise Inventory 10,000.00
Equipment 20,000.00
Ri, Capital 50,000.00
To record investment of Ri in the partnership

Date Account Description Post. Ref Dr Cr

1/1/2018 Cash 15,000.00
Merchandise Inventory 15,000.00
Seri, Capital 30,000.00
To record investment of Se-Ri in the partnership

Compound entry is also accepted

CASE 1: CLOY PARTNERSHIP
Prepare the Statement of Changes in Partners' Equity for Years 2018 & 2019. (5 points)

CLOY Partnership
Statement of Changes in Partners' Equity
31-Dec-18
Ri Se-Ri
Beginning Balance 50,000.00 30,000.00
Additional Invesment - -
Profit (loss) 15,200.00 12,800.00
Less: Withdrawals (7,000.00) (6,000.00)
Ending Balance 58,200.00 36,800.00

CLOY Partnership
Statement of Changes in Partners' Equity
31-Dec-19
Ri Se-Ri Seo-Dan
Beginning Balance 49,100.00 31,900.00 54,000.00
Additional Invesment - - -
Profit (loss) (4,200.00) (3,000.00) (4,800.00)
Less: Withdrawals (4,900.00) (3,900.00) (4,200.00)
Ending Balance 40,000.00 25,000.00 45,000.00

Distribution of Net income 2018

Ri Se-ri Total
Salaries 10,000.00 10,000.00 20,000.00
Balance 5,200.00 2,800.00 8,000.00
Profit allocated 15,200.00 12,800.00 28,000.00

Distribution of Net income 2019

Ri(35%) Se-ri (25%) Se-ri (40%) Total
Loss allocated (4,200.00) (3,000.00) (4,800.00) (12,000.00)
CASE 1: CLOY PARTNERSHIP
Prepare the journal entry to record the admission of Seo-Dan. (5 points)

Date Account Description Post. Ref Dr Cr

1/2/2019 Cash 40,000
Seo-Dan, Capital 40,000
To record the invesment of Seo-Dan

1/2/2019 Ri, Capital 9,100

Se-ri, Capital 4,900
Seo-Dan, Capital 14,000
To record the bonus to Seo-Dan

Compound entry is also accepted

Solution:
Ri Capital Se-ri Capital
58,200.00 36,800.00

Total Contributed
Total Agreed Capital Capital
Old Partners 81,000 95,000 (14,000)
New Partners 54,000 40,000 14,000 Bonus to new partner
135,000 135,000 -

New Capital Balances

Ri Capital Se-ri Capital Seo-Dan
Before Admissio 58,200 36,800 40,000
Bonus (9,100) (4,900) 14,000
After admission 49,100 31,900 54,000
Bonus to new partner
CASE 1: CLOY PARTNERSHIP
Prepare the Statement of Liquidation (5 points)

All transactions of CLOY are cash basis.

CLOY PARTNERSHIP
STATEMENT OF LIQUIDATION
1-Jan-20
Equity
Cash Non-cash Assets Liabilities Ri
Beginning Balance 65,000.00 45,000.00 40,000.00
Realization of noncash as 50,000.00 (45,000.00) 1,750.00
Balances 115,000.00 - 41,750.00
Final cash distribution (115,000.00) - - - - (41,750.00)
Balances - - - - - -

Entries:
Accounts DR CR
Cash 50,000
Non-cash Assets 45,000
Ri, capital 1,750
Se-ri, capital 1,250
Seo-dan Capital 2,000

Ri, capital 41,750

Se-ri, capital 26,250
Seo-dan Capital 47,000
Cash 115,000
 Equity
Se-ri Seo-dan
25,000.00 45,000.00
1,250.00 2,000.00
26,250.00 47,000.00
(26,250.00) (47,000.00)
- -
 CASE 2: ICE PARTNERSHIP
1. Prepare Statement of Liquidation. (5 points)
ICE PARTNERSHIP
STATEMENT OF LIQUIDAT

Cash Non-cash Assets Loans Receivable-Nic

Balances 18,000.00 51,000.00 3,000.00
Realization of Assets 22,000.00 (51,000.00)
Balances 40,000.00 - 3,000.00
Payment of Liabilities (11,000.00)
Balances 29,000.00 - 3,000.00
Liquidation Expenses Paid (1,000.00)
Balances 28,000.00 - 3,000.00
Loans Receivable-nice (3,000.00)
Balances 28,000.00 - -
Additional Investment 3,000.00
Balances 31,000.00 - -
Absorb deficiency
Balances 31,000.00 - -
Final cash distribution (31,000.00) - -
Balances - - -

2. How much cash should be distributed to each partner after the liquidation? (5 points)

Nice (45%)
Balances 6,000.00
Loans (3,000.00)
Balances 3,000.00
Total Loss on realization (9,450.00)
Balances (6,450.00)
Additional investment 3,000.00
Balances (3,450.00)
Deficiency 3,450.00
Cash Distributed -
 ICE PARTNERSHIP
STATEMENT OF LIQUIDATION

Capital
Other Liabilities Nice (45%) Rice (35%) Dice (20%)
20,000.00 6,000.00 30,000.00 16,000.00
(13,050.00) (10,150.00) (5,800.00)
20,000.00 (7,050.00) 19,850.00 10,200.00
(20,000.00) 4,050.00 3,150.00 1,800.00
- (3,000.00) 23,000.00 12,000.00
(450.00) (350.00) (200.00)
- (3,450.00) 22,650.00 11,800.00
(3,000.00)
- (6,450.00) 22,650.00 11,800.00
3,000.00
- (3,450.00) 22,650.00 11,800.00
3,450.00 (2,195.45) (1,254.55)
- - 20,454.55 10,545.45
- - (20,454.55) (10,545.45)
- - - -

after the liquidation? (5 points)

Rice (35%) Dice (20%) Total Non-cash assets 51,000.00

30,000.00 16,000.00 52,000.00 Sold 22,000.00
(3,000.00) Loss on realization o (29,000.00)
30,000.00 16,000.00 49,000.00 Liquidation expense (1,000.00)
(7,350.00) (4,200.00) (21,000.00) Condoned - Liab 9,000.00
22,650.00 11,800.00 28,000.00 Total Loss (21,000.00)
3,000.00
22,650.00 11,800.00 31,000.00
(2,195.45) (1,254.55)
20,454.55 10,545.45 31,000.00
Additional Solutions:
Sales 100,000.00

Purchases 40,000.00

Merchandise Inventory, 1/1/2018 25,000.00

Merchandise Inventory, 12/31/2018 (23,000.00)

Cost of Sales 42,000.00

Gross Profit 58,000.00
Distribution Cost 18,000.00
Administrative Expenses 12,000.00
Net Income 28,000.00

2018 Distribution of Net income

Ri Se-ri
Salaries 10,000.00 10,000.00 20,000.00
Remainder 5,200.00 2,800.00 8,000.00
Allocation 15,200.00 12,800.00 28,000.00

2019 Distribution of Net income

Loss: 12000
Ri (35%) Se-ri (25%) Seo-Dan (40%)
Distribution of loss (4,200.00) (3,000.00) (4,800.00)
(12,000.00)