Alex and Bess have been in partnership for many years. The partners, who share profits and losses on a 70:30 basis, respectively, wish to retire and have agreed to liquidate the business. Liquidation expenses are estimated to be $4,500. At the date the partnership ceases operations, the balance sheet is as follows: Cash$61,000Liabilities$45,500Noncash assets 200,000Alex, capital 140,000 Bess, capital 75,500Total assets$261,000Total liabilities and capital$261,000 Part A: Prepare journal entries for the following transactions that occurred in chronological order: Distributed safe cash payments to the partners.Paid $27,300 of the partnership’s liabilities.Sold noncash assets for $215,500.Distributed safe cash payments to the partners.Paid remaining partnership liabilities of $18,200.Paid $3,500 in liquidation expenses; no further expenses will be incurred.Distributed remaining cash held by the business to the partners.

Liquidation : Lumpsum payment or installment is made while liquidating partnership. Cash is…

Answered: Alex and Bess have been in partnership…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Alex and Bess have been in partnership for many years. The partners, who share profits and losses on a 70:30 basis, respectively, wish to retire and have agreed to liquidate the business. Liquidation expenses are estimated to be $4,500. At the date the partnership ceases operations, the balance sheet is as follows:


Cash	$	61,000	Liabilities	$	45,500
Noncash assets		200,000	Alex, capital		140,000
			Bess, capital		75,500
Total assets	$	261,000	Total liabilities and capital	$	261,000

Part A: Prepare journal entries for the following transactions that occurred in chronological order:

Distributed safe cash payments to the partners.

Paid $27,300 of the partnership’s liabilities.

Sold noncash assets for $215,500.

Distributed safe cash payments to the partners.

Paid remaining partnership liabilities of $18,200.

Paid $3,500 in liquidation expenses; no further expenses will be incurred.

Distributed remaining cash held by the business to the partners.

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