Kendra, Cogley, and Mei share income and loss in a 3:2:1 ratio. The partners have decided to liquidate their partnership. On the day of liquidation their balance sheet appears as follows. KENDRA, COGLEY, AND MEI Balance Sheet May 31 Assets Liabilities and Equity Cash $ 180,800 Accounts payable $ 245,500 Inventory 537,200 Kendra, Capital 93,000 Cogley, Capital 212,500 Mei, Capital 167,000 Total assets $ 718,000 Total liabilities and equity $ 718,000 Required: For each of the following scenarios, complete the schedule allocating the gain or loss on the sale of inventory. Prepare journal entries to record the below transactions. (Do not round intermediate calculations. Amounts to be deducted or Losses should be entered with a minus sign. Round your final answers to the nearest whole dollar.) 1. Inventory is sold for $600,000.
2. Inventory is sold for $500,000.
3. Inventory is sold for $320,000 and any partners with capital deficits pay in the amount.

a. Inventory is sold for $600,000.

gain on sale of inventory = $600,000 - $537,200 = $62,800

allocation of gain:

Kendra 1/2 x $62,800 = $31,400

Cogley 1/3 x $62,800 = $20,933

Mei 1/6 x $62,800 = $10,467

Dr Cash 600,000

   Cr Inventory 537,200

   Cr Gain on sale of inventory 62,800

Dr Gain on sale of inventory 62,800

   Cr Kendra, capital 31,400

    Cr Cogley, capital 20,933

    Cr Mei, capital 10,467

Dr Accounts payable 245,500

    Cr Cash 245,500

Dr Kendra, capital 124,400

Dr Cogley, capital 233,433

Dr Mei, capital 177,467

    Cr Cash 535,300

b. Inventory is sold for $500,000.

loss on sale of inventory = $500,000 - $537,200 = -$37,200

allocation of loss:

Kendra 1/2 x $37,200 = $18,600

Cogley 1/3 x $37,200 = $12,400

Mei 1/6 x $37,200 = $6,200

Dr Cash 500,000

Dr Loss on sale of inventory 37,200

   Cr Inventory 537,200

Dr Kendra, capital 18,600

Dr Cogley, capital 12,400

Dr Mei, capital 6,200

    Dr Loss on sale of inventory 37,200

Dr Accounts payable 245,500

    Cr Cash 245,500

Dr Kendra, capital 74,400

Dr Cogley, capital 200,100

Dr Mei, capital 160,800

    Cr Cash 435,300

c. Inventory is sold for $320,000 and any partners with capital deficits pay in the amount of their deficits.

loss on sale of inventory = $320,000 - $537,200 = -$217,200

allocation of loss:

Kendra 1/2 x $217,200 = $108,600

Cogley 1/3 x $217,200 = $72,400

Mei 1/6 x $217,200 = $36,200

Dr Cash 320,000

Dr Loss on sale of inventory 217,200

    Cr Inventory 537,200

Dr Kendra, capital 108,600

Dr Cogley, capital 72,400

Dr Mei, capital 36,200

    Dr Loss on sale of inventory 217,200

Dr Cash 15,600

    Cr Kendra, capital 15,600

Dr Accounts payable 245,500

    Cr Cash 245,500

Dr Cogley, capital 140,100

Dr Mei, capital 130,800

    Cr Cash 270,900

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