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Prepare journal entries to record these liquidation transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Prepare journal entries to record these liquidation transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

FINANCIAL ACCOUNTING
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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The partnership of Butler, Osman, and Ward was formed several years ago 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 $51,000 are expected. The partnership balance sheet at the start of liquidation is as follows: Cash Accounts receivable Office equipment (net) Building (net) Land Total assets $ 47,000 77,000 67,000 195,000 185,000 $ 571,000 Liabilities Butler, loan Butler, capital (25%) Osman, capital (25%) Ward, capital (50%) Total liabilities and capital 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 $28,500, the building for $146,000, and the land for $188,000. 3. Distributed safe payments of cash. 4. Paid all liabilities in full. 5. Paid actual liquidation expenses of $38,500 only. 6. Made final cash distributions to the partners. $ 187,000 47,000 135,000 47,000 155,000 $ 571,000 Prepare journal entries to record these liquidation transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Transcribed Image Text:The partnership of Butler, Osman, and Ward was formed several years ago 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 $51,000 are expected. The partnership balance sheet at the start of liquidation is as follows: Cash Accounts receivable Office equipment (net) Building (net) Land Total assets $ 47,000 77,000 67,000 195,000 185,000 $ 571,000 Liabilities Butler, loan Butler, capital (25%) Osman, capital (25%) Ward, capital (50%) Total liabilities and capital 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 $28,500, the building for $146,000, and the land for $188,000. 3. Distributed safe payments of cash. 4. Paid all liabilities in full. 5. Paid actual liquidation expenses of $38,500 only. 6. Made final cash distributions to the partners. $ 187,000 47,000 135,000 47,000 155,000 $ 571,000 Prepare journal entries to record these liquidation transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
1 2 3 1 2 3 Cash Butler, capital Osman, capital Ward, capital Accounts receivable Cash Butler, capital Osman, capital Ward, capital Office equipment (net) Building (net) Land Butler, loan Butler, capital Osman, capital Ward, capital Cash 69,300 1,925 1,925 3,850 362,500 21,125 21,125 42,250 47,000 47,000 X 47,000 X 94,000 X 77,000 67,000 195,000 185,000 240,800
Transcribed Image Text:1 2 3 1 2 3 Cash Butler, capital Osman, capital Ward, capital Accounts receivable Cash Butler, capital Osman, capital Ward, capital Office equipment (net) Building (net) Land Butler, loan Butler, capital Osman, capital Ward, capital Cash 69,300 1,925 1,925 3,850 362,500 21,125 21,125 42,250 47,000 47,000 X 47,000 X 94,000 X 77,000 67,000 195,000 185,000 240,800
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