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 ceases operations, the balance sheet is as follows: |
Cash | $ | 100,000 | Liabilities | $ | 80,000 |
Noncash assets | 200,000 | Fred, capital | 100,000 | ||
George, capital | 120,000 | ||||
Total assets | $ | 300,000 | Total liabilities and capital | $ | 300,000 |
1. | Prepare journal entries for the following transactions:(Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) |
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. |
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