Below is the post-closing trial balance, prior to liquidation of DEF & Associates. All balances are normal.
Assets: Cash $12,000; Accounts receivable $34,000; Equipment $90,000; Accumulated Depreciation $40,000.
Liabilities and equity: Accounts payable $56,000; Doug's Capital $12,000; Ellen's Capital $10,000; Frank's Capital $18,000.
Partners share gains and losses in a 3:2:3 ratio for Doug, Ellen, and Frank, respectively. Noncash assets were sold for $60,000. Ellen’s share of the gain or loss would be a
To determine Ellen's share of the gain or loss, we need to calculate the total gain or loss first.
Total gain or loss = Selling price of noncash assets - Book value of noncash assets
Total gain or loss = $60,000 - ($90,000 - $40,000)
Total gain or loss = $60,000 - $50,000
Total gain or loss = $10,000
Now, we can calculate Ellen's share of the gain or loss using the given ratio.
Ellen's share = Total gain or loss x (Ellen's ratio / Total ratio)
Ellen's share = $10,000 x (2 / (3 + 2 + 3))
Ellen's share = $10,000 x (2 / 8)
Ellen's share = $10,000 x 0.25
Ellen's share = $2,500
Therefore, Ellen's share of the gain or loss would be $2,500.
To determine Ellen's share of the gain or loss from the sale of noncash assets, we need to calculate the total gain or loss and then allocate it based on the partners' ratio.
Step 1: Calculate the net book value of the noncash assets.
- The net book value is calculated by subtracting the accumulated depreciation from the equipment's cost.
Net book value = Equipment - Accumulated Depreciation
= $90,000 - $40,000
= $50,000
Step 2: Calculate the gain or loss from the sale of noncash assets.
- The gain or loss is calculated by subtracting the net book value from the selling price.
Gain or loss = Selling Price - Net Book Value
= $60,000 - $50,000
= $10,000
Step 3: Allocate the gain or loss based on the partners' ratio.
- Ellen's share is determined by her share of the ratio (2/8) multiplied by the total gain or loss.
Ellen's share = (2 / 8) * $10,000
= $2,500
Therefore, Ellen’s share of the gain or loss from the sale of noncash assets would be $2,500.
To calculate Ellen's share of the gain or loss, we need to follow these steps:
Step 1: Calculate the total capital of the partnership.
Total capital = Doug's Capital + Ellen's Capital + Frank's Capital
= $12,000 + $10,000 + $18,000
= $40,000
Step 2: Calculate the total gain or loss from the sale of noncash assets.
Total gain or loss = Sales price of noncash assets - Book value of noncash assets
= $60,000 - ($90,000 - $40,000)
= $60,000 - $50,000
= $10,000
Step 3: Calculate Ellen's share of the gain or loss using the ratio.
Ellen's share = (Ellen's capital / Total capital) * Total gain or loss
= ($10,000 / $40,000) * $10,000
= 0.25 * $10,000
= $2,500
Therefore, Ellen's share of the gain or loss from the sale of noncash assets would be $2,500.