Question
Fred and George have been in partnership for many years. The partners, who share profits and losses on a 60:40 basis, respectively, wish to retire
Fred and George have been in partnership for many years. The partners, who share profits and losses on a 60:40 basis, respectively, wish to retire and have agreed to liquidate the business. Liquidation expenses are estimated to be $10,000. At the date the partnership ceased operations, the balance sheet is as follows:
Cash $100,000 Liabilities $ 80,000
Noncash Assets 200,000 Fred, capital 100,000
Total Assets $,300,000 George, capital 120,000
Total Liab. & Capital $300,000
Part A:
Prepare journal entries for the following transactions:
a. Distributed safe cash payments to the partners
b. Paid $40,000 of the partnerships liabilities
c. Sold noncash assets for $220,000
d. Distributed safe cash payments to the partners
e. Paid all remaining partnership liabilities of $40,000
f. Paid $8,000 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 statement of partnership liquidation
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started