Wally and Jose were in business for several years, sharing profits and losses equally. Because ofJose's poor health, they decided to liquidate the partnership. Wally managed the liquidationbecause Jose was in the hospital. Just before liquidation, the partnership balance sheetcontained the following information:CashOther AssetsTotal AssetsP 800,000P 2,200,000P 3,000,000LiabilitiesWally, CapitalJose, CapitalTotal Liabilities & EquityP 500,000P 1,000,000P 1,500,000P 3,000,000Wally (1) sold the other assets for P 1,750,000, (2) paid off all the creditors, and (3) divided theremaining cash between them, according to their profit and loss sharing ratio.Jose received a note from Wally that read "Good news - sold other assets for P 1,750,000. Have P1,025,000 check waiting for you. Get well soon." Because he will not be released from the hospitalfor several days, Jose asks you to review Wally's liquidation and cash distribution procedures.Do you approve Wally's liquidation and cash distribution procedures? If you think Wally'scomputation is not correct, what amount of final cash settlement should Jose receive? Explain.

Liquidation - When a business experiences insolvency, the process of liquidation is initiated, which…

Wally and Jose were in business for several years, sharing profits and losses equally. Be Jose's poor health, they decided to liquidate the partnership. Wally managed the liq because Jose was in the hospital. Just before liquidation, the partnership baland contained the following information: Cash Other Assets Total Assets P 800,000 P 2,200,000 P 3,000,000 Liabilities Wally, Capital Jose, Capital Total Liabilities & Equity P 500,000 P 1,000,000 P 1,500,000 P 3,000,000 Wally (1) sold the other assets for P 1,750,000, (2) paid off all the creditors, and (3) divi remaining cash between them, according to their profit and loss sharing ratio. loso received a note from Wally that road "Good news fold other assots for R1750.000

Wally and Jose were in business for several years, sharing profits and losses equally. Be Jose's poor health, they decided to liquidate the partnership. Wally managed the liq because Jose was in the hospital. Just before liquidation, the partnership baland contained the following information: Cash Other Assets Total Assets P 800,000 P 2,200,000 P 3,000,000 Liabilities Wally, Capital Jose, Capital Total Liabilities & Equity P 500,000 P 1,000,000 P 1,500,000 P 3,000,000 Wally (1) sold the other assets for P 1,750,000, (2) paid off all the creditors, and (3) divi remaining cash between them, according to their profit and loss sharing ratio. loso received a note from Wally that road "Good news fold other assots for R1750.000

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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Alex and Bess have been in partnership for many years. The partners, who share profits and losses on a 70:30 basis, respectively, wish to retire and have agreed to liquidate the business. Liquidation expenses are estimated to be $6,500. At the date the partnership ceases operations, the balance sheet is as follows: $ 65,000 240,000 $ 47,500 168,000 89,500 Cash Liabilities Noncash assets Alex, capital Bess, capital Total liabilities and capital Total assets $ 305,000 $ 305,000 Part A: Prepare journal entries for the following transactions that occurred in chronological order: a. Distributed safe cash payments to the partners. b. Paid $28,500 of the partnership's liabilities. c. Sold noncash assets for $257,500. d. Distributed safe cash payments to the partners. e. Paid remaining partnership liabilities of $19,000. f. Paid $5,100 in liquidation expenses; no further expenses will be incurred. g. Distributed remaining cash held by the business to the partners. Part B: Prepare a final…
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