Chapter 5
Partnerships
232
AP-11A (
8
)
Twenty years ago, three brothers formed a partnership, which now has to end due to their
increasing conflicts. Before the liquidation, the partnership had assets valued at $500,000
and liabilities valued at $300,000. The partners’ equity balances were $50,000 for Brother A,
$70,000 for Brother B and $80,000 for Brother C. The brothers sold the net assets for $230,000.
Note that any profit or loss is distributed equally among the partners according to the
terms of their partnership agreement. Prepare journal entries on December 31, 2016 for the
following items.
• The sale of net assets.
• The allocation of the gain or loss on the sale of net assets.
• The cash distribution to the three brothers.
Date
Account Title and Explanation
Debit
Credit
