CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

LESSON 23-3LESSON 23-3

Dissolving a Partnership

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LESSON 23-3CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

ACCOUNT BALANCES BEFORE ACCOUNT BALANCES BEFORE REALIZATIONREALIZATION page 686

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LESSON 23-3CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

GAIN ON REALIZATIONGAIN ON REALIZATION page 686

1. Calculate the gain. 2. Record the entry.

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August 1, 20--. Received cash from sale of truck, $13,000.00: original cost, $20,000.00; total accumulated depreciation recorded to date, $8,000.00. Receipt No. 316.

Gain on Realization

=Book Value ofAsset Sold

–Value of Asset Received

$1,000.00=–Cash $13,000.00

Cost$20,000.00Accum. Depr. 8,000.00Book Value$12,000.00

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LESSON 23-3CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

LOSS ON REALIZATIONLOSS ON REALIZATION page 687

1. Calculate the loss. 2. Record the entry.

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August 1. Received cash from sale of supplies, $1,100.00; balance of supplies account, $1,500.00. Receipt No. 317.

Loss on Realization

=Book Value ofAsset Sold

–Value of Asset Received

$(400.00)=–Cash $1,100.00 Supplies $1,500.00

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LESSON 23-3CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

LIQUIDATING LIABILITIESLIQUIDATING LIABILITIES page 688

August 4, 20--. Paid cash to all creditors for the amounts owed, $4,000.00. Check No. 422.

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LESSON 23-3CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

ACCOUNT BALANCES AFTER LIQUIDATION ACCOUNT BALANCES AFTER LIQUIDATION OF NONCASH ASSETS AND PAYMENT OF OF NONCASH ASSETS AND PAYMENT OF LIABILITIESLIABILITIES page 688

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LESSON 23-3CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

$360.00 240.00$600.00

==

60%40%

××

$600.00$600.00

WalkerJeterTotal

Share of the Balance of Loss and Gain on Realization

=Fixed Percentage

×Balance of Loss and Gain on Realization

DISTRIBUTING LOSS OR GAIN ON DISTRIBUTING LOSS OR GAIN ON REALIZATION TO PARTNERSREALIZATION TO PARTNERS page 689

August 6, 20--. Recorded distribution of gain on realization: to Adam Walker, $360.00; to Shirley Jeter, $240.00. Memorandum No. 412.

1. Calculate each partner’s share of gain or loss.

2. Record entry to distribute gain or loss.

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LESSON 23-3CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

DISTRIBUTING REMAINING CASH TO DISTRIBUTING REMAINING CASH TO PARTNERSPARTNERS page 689

August 6. Recorded final distribution of remaining cash to partners: to Adam Walker, $18,360.00; to Shirley Jeter, $12,740.00. Check Nos. 423 and 424.

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LESSON 23-3CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

TERMS REVIEWTERMS REVIEW

liquidation of a partnership realization limited liability partnership (LLP)

page 690