Answered: The partnership of Frick, Wilson, and…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

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 - $66,000

Noncash - $231,000

Liabilities - $46,000

Frick, capital (60%) - $135,000

Wilson, capital (20%) - $37,000

Clarke, capital (20%) - $79,000

The following transactions occured in liquidating its business:

Distributed safe payments of cash immediately to the partners. Liquidation expenses of $10,000 are estimated as a basis for this computation.
Sold noncash assets with a book value of $98,000 for $66,000.
Paid all liabilities.
Distributed safe payments of cash again.
Sold remaining noncash assets for $53,000.
Paid actual liquidation expenses of $8,000 only.
Distributedremainingcashtothepartnersandclosedthefinancialrecordsofthebusinesspermanently.

Produce a final statement of liquidation for this partnership using the predistribution plan to determine payments of cash to partners.

FRICK, WILSON, AND CLARKE
Statement of Partnership Liquidation
Final Balances
Wilson,
Capital
(20%)
135,000 $ 37,000 $ 79,000
Clarke,
Capital
(20%)
Noncash
Assets
Frick, Capital
(60%)
Cash
Liabilities
Beginning balances
Distribution
Updated balances
Noncash assets sold
Updated balances
Liabilities paid
Updated balances
First (remainder of first distribution)
Next
Next
Updated balances
$ 66,000 $ 231,000 $ 46,000 $
| (10,000)
$ 56,000 $ 231,000 $ 46,000 $
or (10,000)
135,000 $ 37,000 $ 69,000
(6,400)
115,800 $ 30,600 $ 62,600
66,000
(98,000)
(19,200)
(6,400)
$ 122,000 $ 133,000 $ 46,000 $
| (46,000)
$ 76,000 $ 133,000 $
(46,000)
$
115,800 $ 30,600 $ 62,600
(32,000)
(24,000)
(8,000)
$ 44,000 $ 133,000 $
(133,000)
91,800 $ 30,600 $ 54,600
(16,000)
43,800 $ 14,600 $ 38,600
(1,600)
39,000 $ 13,000 $ 37,000
$
Noncash assets sold
53,000
(48,000)
(16,000)
Updated balances
Liquidation expenses paid
Updated balances
Final distribution based on ending capital account balances
$ 97,000 $
(8,000)
$ 89,000 $
이 $
$
(4,800)
(1,600)
$
$
Ending balance
$ 89,000 $
$
$
39,000 $ 13,000
$ 37,000
%24

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions