The partnership of Frick, Wilson, and Clarke has elected to cease all operations and liquidate its business property. A balance sheet drawn up at this time shows the following account balances: Cash Noncash assets Total assets $ 66,000 273,000 $339,000 Liabilities Frick, capital (60%) Wilson, capital (20%) Clarke, capital (20%) Total liabilities and capital Part A Prepare a predistribution plan for this partnership. Part B The following transactions occur in liquidating this business: $ 37,000 165,000 44,000 93,000 $339,000 1. Distributed safe payments of cash immediately to the partners. Liquidation expenses of $10,000 are estimated as a basis for this computation. 2. Sold noncash assets with a book value of $112,000 for $66.000. 3. Paid all liabilities. 4. Distributed safe payments of cash again. 5. Sold remaining noncash assets for $60,000. 6. Paid actual liquidation expenses of $8,000 only. 7. Distributed remaining cash to the partners and closed the financial records of the business permanently. Produce a final statement of liquidation for this partnership using the predistribution plan to determine payments of cash to partners. Part C Prepare journal entries to record the liquidation transactions reflected in the final statement of liquidation.
The partnership of Frick, Wilson, and Clarke has elected to cease all operations and liquidate its business property. A balance sheet drawn up at this time shows the following account balances: Cash Noncash assets Total assets $ 66,000 273,000 $339,000 Liabilities Frick, capital (60%) Wilson, capital (20%) Clarke, capital (20%) Total liabilities and capital Part A Prepare a predistribution plan for this partnership. Part B The following transactions occur in liquidating this business: $ 37,000 165,000 44,000 93,000 $339,000 1. Distributed safe payments of cash immediately to the partners. Liquidation expenses of $10,000 are estimated as a basis for this computation. 2. Sold noncash assets with a book value of $112,000 for $66.000. 3. Paid all liabilities. 4. Distributed safe payments of cash again. 5. Sold remaining noncash assets for $60,000. 6. Paid actual liquidation expenses of $8,000 only. 7. Distributed remaining cash to the partners and closed the financial records of the business permanently. Produce a final statement of liquidation for this partnership using the predistribution plan to determine payments of cash to partners. Part C Prepare journal entries to record the liquidation transactions reflected in the final statement of liquidation.
Chapter21: Partnerships
Section: Chapter Questions
Problem 55P
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Require parts a, b, & c
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