The MFP Partnership is to be liquidated when the ledger shows the following:
Mossimo, Fandango, and Plank’s income ratios are 6:3:1, respectively.
Prepare separate entries to record the liquidation of the partnership assuming that the noncash assets are sold for $140,000 in cash.
Prior to the distribution of cash to the partners, the accounts of ABC Company are: Cash $35,000, Acock, Capital (Dr.) $5,000, Buster, Capital (Cr.) $25,000, and Cutter, Capital (Cr.) $15,000. They share income on a 5:3:2 basis.
Prepare entries to record (a) the absorption of Acock’s capital deficiency by the other partners and (b) the distribution of cash to the partners with credit balances.