Masco, Short, and Henderson who are partners in the MSH Company share income and loss in a 2:2:1 ratio. They plan to liquidate their partnership. At liquidation, their balance sheet appears as follows. Prepare journal entries for (a) the sale of land and equipment sold as a package for
$500,000, (b) the allocation of the gain or loss, (c) the payment of the liabilities, and (d) the distribution of cash to the individual partners.
MSH Company Balance Sheet January 31

\begin{array} {| l | l | l | l| } \hline\text { Assets } & & \text { Liabilities and Equity } & \\\hline \text { Cash } & \$ 200,000 & \text { Accounts Payable } & \$ 221,500 \\\hline \text { Eqquipment } & 200,000 & \text { Masco, Capital } & 210,000 \\\hline \text { Land } & 350,000 & \text { Short, Capital } & 178,000 \\\hline\end{array}

\begin{array} { l | l | l | l } \hline \text { Land } & 350,000 & \text { Short, Capital } & 178,000 \\\hline & & \text { Henderson, Capital } & 140,500 \\\hline \text { Total assets } & \$ 750,000 & \text { Total liabilities and equity } & \$ 750,000 \\\hline\end{array}

Peters and Chong Are Partners and Share Equally in Income

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