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 $58,000 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 $ 54,000 84,000 74,000 230,000 220,000 $662,000 Liabilities Butler, loan Butler, capital (25 %) Osman, capital (25%) Ward, capital (50 %) Total liabilities and capital $ 194,000 54,000 170,000 54, 000 190,000 $ 662,000 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 $32,000, the building for $174,000, and the land for $216,000. 3. Distributed safe payments of cash. 4. Paid all liabilities in full. 5. Paid actual liquidation expenses of $42,000 only. 6. Made final cash distributions to the partners. 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.)
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 $58,000 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 $ 54,000 84,000 74,000 230,000 220,000 $662,000 Liabilities Butler, loan Butler, capital (25 %) Osman, capital (25%) Ward, capital (50 %) Total liabilities and capital $ 194,000 54,000 170,000 54, 000 190,000 $ 662,000 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 $32,000, the building for $174,000, and the land for $216,000. 3. Distributed safe payments of cash. 4. Paid all liabilities in full. 5. Paid actual liquidation expenses of $42,000 only. 6. Made final cash distributions to the partners. 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.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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 $58,000 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
$ 54,000
84,000
74,000
230,000
220,000
$ 662,000
Liabilities
Butler, loan
Butler, capital (25%)
Osman, capital (25%)
Ward, capital (50%)
Total liabilities and capital
$ 194, 000
54,000
170,000
54, 000
190, 000
$662,000
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 $32,000, the building for $174,000, and the land for $216,000.
3. Distributed safe payments of cash.
4. Paid all liabilities in full.
5. Paid actual liquidation expenses of $42,000 only.
6. Made final cash distributions to the partners.
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.)
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