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 $ 46,000 Liabilities $ 35,000 Noncash assets 115,000 Alex, capital 80,500 Bess, capital 45,500 Total assets $ 161,000 Total liabilities and capital $ 161,000 Part A: Prepare journal entries for the following transactions that occurred in chronological order: Distributed safe cash payments to the partners. Paid $21,000 of the partnership’s liabilities. Sold noncash assets for $126,000. Distributed safe cash payments to the partners. Paid remaining partnership liabilities of $14,000. Paid $3,300 in liquidation expenses; no further expenses will be incurred. Distributed remaining cash held by the business to the partners. Part B: Prepare a final statement of partnership liquidation.
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 $ 46,000 Liabilities $ 35,000 Noncash assets 115,000 Alex, capital 80,500 Bess, capital 45,500 Total assets $ 161,000 Total liabilities and capital $ 161,000 Part A: Prepare journal entries for the following transactions that occurred in chronological order: Distributed safe cash payments to the partners. Paid $21,000 of the partnership’s liabilities. Sold noncash assets for $126,000. Distributed safe cash payments to the partners. Paid remaining partnership liabilities of $14,000. Paid $3,300 in liquidation expenses; no further expenses will be incurred. Distributed remaining cash held by the business to the partners. Part B: Prepare a final statement of partnership liquidation.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Alex and Bess have been in
| Cash | $ | 46,000 | Liabilities | $ | 35,000 |
| Noncash assets | 115,000 | Alex, capital | 80,500 | ||
| Bess, capital | 45,500 | ||||
| Total assets | $ | 161,000 | Total liabilities and capital | $ | 161,000 |
Part A: Prepare
- Distributed safe cash payments to the partners.
- Paid $21,000 of the partnership’s liabilities.
- Sold noncash assets for $126,000.
- Distributed safe cash payments to the partners.
- Paid remaining partnership liabilities of $14,000.
- Paid $3,300 in liquidation expenses; no further expenses will be incurred.
- Distributed remaining cash held by the business to the partners.
Part B: Prepare a final statement of partnership liquidation.
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