Part AThe partnership of Butler, Osman, and Ward was formed several years as a local tax preparation firm. Two partners have reached retirement age and the partners have decided to terminate operations and liquidate the business. Liquidation expenses of $34,000 are expected. The partnership balance sheet at the start of liquidation is as follows: Cash . . . . . . . . . . . . . . . . . . . $ 30,000  Liabilities . . . . . . . . .  . . . . . . $170,000Accounts receivable . . . . . 60,000 Butler, loan . . . . . . . . . . . .. . . . 30,000Office equipment (net) . . . . 50,000 Butler, capital (25%) . . . . . . . . . 50,000Building (net) . . . . . . . . . . . . 110,000 Osman, capital (25%) . . . . . . .  . 30,000Land . . . . . . . . . . . . . . . . . . . 100,000 Ward, capital (50%) . . . . .. . . . . 70,000 Prepare a predistribution plan for this partnership.Part BThe following transactions transpire in chronological order during the liquidation of the partnership:1. Collected 90 percent of the accounts receivable and wrote the remainder off as uncollectible.2. Sold the office equipment for $20,000, the building for $80,000, and the land for $120,000.3. Made safe capital distributions.4. Paid all liabilities in full.5. Paid actual liquidation expenses of $30,000 only.6. Made final cash distributions to the partners.Prepare journal entries to record these liquidation transactions.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Part A
The partnership of Butler, Osman, and Ward was formed several years as a local tax preparation firm. Two partners have reached retirement age and the partners have decided to terminate operations and liquidate the business. Liquidation expenses of $34,000 are expected. The partnership
balance sheet at the start of liquidation is as follows:
Cash . . . . . . . . . . . . . . . . . . . $ 30,000  Liabilities . . . . . . . . .  . . . . . . $170,000
Accounts receivable . . . . . 60,000 Butler, loan . . . . . . . . . . . .. . . . 30,000
Office equipment (net) . . . . 50,000 Butler, capital (25%) . . . . . . . . . 50,000
Building (net) . . . . . . . . . . . . 110,000 Osman, capital (25%) . . . . . . .  . 30,000
Land . . . . . . . . . . . . . . . . . . . 100,000 Ward, capital (50%) . . . . .. . . . . 70,000

Prepare a predistribution plan for this partnership.
Part B
The following transactions transpire in chronological order during the liquidation of the partnership:
1. Collected 90 percent of the accounts receivable and wrote the remainder off as uncollectible.
2. Sold the office equipment for $20,000, the building for $80,000, and the land for $120,000.
3. Made safe capital distributions.
4. Paid all liabilities in full.
5. Paid actual liquidation expenses of $30,000 only.
6. Made final cash distributions to the partners.
Prepare journal entries to record these liquidation transactions.

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