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Prepare journal entries to record these liquidation transactions.

Prepare journal entries to record these liquidation transactions.

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 $47,000 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 $ 43,000 73,000 63,000 175,000 165,000 $ 519,000 Liabilities $ 183,000 Butler, loan 43,000 Butler, capital (25%) 115,000 Osman, capital (25%) 43,000 Ward, capital (50%) 135,000 Total liabilities and capital $ 519,000 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 $26,500, the building for $130,000, and the land for $172,000. 3. Distributed safe payments of cash. 4. Paid all liabilities in full. 5. Paid actual liquidation expenses of $36,500 only. 6. Made final cash distributions to the partners. Prepare journal entries to record these liquidation transactions.
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 $47,000 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 $ 43,000 73,000 63,000 175,000 165,000 $ 519,000 Liabilities $ 183,000 Butler, loan 43,000 Butler, capital (25%) 115,000 Osman, capital (25%) 43,000 Ward, capital (50%) 135,000 Total liabilities and capital $ 519,000 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 $26,500, the building for $130,000, and the land for $172,000. 3. Distributed safe payments of cash. 4. Paid all liabilities in full. 5. Paid actual liquidation expenses of $36,500 only. 6. Made final cash distributions to the partners. Prepare journal entries to record these liquidation transactions.
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