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Liquidation—Journal entries
After closing entries were made on December 31, 2011, the ledger of Mac, Nan, and Obe contained the following balances:
Cash $39,000 Accounts Payable $5,000
Inventory $16,000 Mac capital (40%) $15,000
Nan capital (30%) 8,000
Obe capital (30%) 27,000
Due to unsuccessful operations, the partners decide to liquidate the
business. During January some of the inventory is sold at cost for
$10,000, and on January 31, 2012, all available cash is distributed. It
is not known if the remaining inventory items can be sold.
Required: Prepare all journal entries necessary to account for the transactions of the partnership during January 2012.
