E16-4 Lump-Sum Liquidation LO 16-2

Matthews, Mitchell, and Michaels are partners in the BG Land Development Company and share losses in a 5:3:2 ratio, respectively. The balance sheet on June 30, 20X1, when they decide to liquidate the business, is as follows:

Assets				Liabilities and Capital
Cash	$	16,000		Accounts Payable	$	36,000
Noncash Assets		158,000		Mitchell, Loan		13,000
				Matthews, Capital		77,000
				Mitchell, Capital		34,400
				Michaels, Capital		13,600
Total Assets	$	174,000		Total Liabilities and Equities	$	174,000

The noncash assets are sold for $120,000.

Required:

a.	Prepare a statement of partnership realization and liquidation.

b.	Prepare the required journal entries to account for the liquidation of the BG Land Development Company. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)