Matthews, Mitchell, and Michaels are partners in 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 $20,000 Accounts Payable $30,000

Noncash Assets 150,000 Mitchell, Loan 10,000

Matthews, Capital 80,000

Mitchell, Capital 36,000

Michaels, Capital 14,000

Total Assets $170,000 Total Liabilities and Equities $170,000

The noncash assets are sold for $110,000.

Required

1. Prepare a statement of partnership realization and liquidation.
2. Prepare the required journal entries to account for the liquidation of BG Land Development Company.