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Return to questionItem $3$

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 $ $69,000$ Liabilities $ $40,000$

Noncash assets $285,000$ Frick, capital $(60\%)171,000$

Wilson, capital $(20\%)46,000$

Clarke, capital $(20\%)97,000$

Total assets $ $354,000$ Total liabilities and capital $ $354,000$

Part A

Prepare a predistribution plan for this partnership.

Part B

The following transactions occur in liquidating this business:

Distributed safe payments of cash immediately to the partners. Liquidation expenses of $$8,000$ are estimated as a basis for this computation.

Sold noncash assets with a book value of $$116,000$ for $$69,000.$

Paid all liabilities.

Distributed safe payments of cash again.

Sold remaining noncash assets for $$62,000.$

Paid actual liquidation expenses of $$6,000$ only.

Distributed remaining cash to the partners and closed the financial records of the business permanently.

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

Part C

Prepare journal entries to record the liquidation transactions reflected in the final statement of liquidation.