Requirement B

The partnership of Wingler, Norris, Rodgers, and Guthrie was formed several years ago as a local architectural firm. Several partners have recently undergone personal financial problems and have decided to terminate operations and liquidate the business. The following balance sheet is drawn up as a guideline for this process: Cash Accounts receivable Inventory Land Building and equipment (net) $ 59,000 126,000 145,000 107,000 190,000 Liabilities Rodgers, loan Wingler, capital (30%) Norris, capital (10%) Rodgers, capital (20%) Guthrie, capital (40%) Total liabilities and capital $ 57,000 79,000 186,000 132,000 96,000 77,000 $627,000 Total assets $627,000 When the liquidation commenced, liquidation expenses of $23,000 were anticipated as being necessary to dispose of all property. Part A Prepare a predistribution plan for this partnership. Part B The following transactions transpire during the liquidation of the Wingler, Norris, Rodgers, and Guthrie partnership: 1. Collected 90 percent of the total accounts receivable with the rest judged to be uncollectible. 2. Sold the land, building, and equipment for $172,000. 3. Distributed safe payments of cash. 4. Learned that Guthrie, who has become personally insolvent, will make no further contributions. 5. Paid all liabilities. 6. Sold all inventory for $93,000. 7. Distributed safe payments of cash again. 8. Paid actual liquidation expenses of $17,000 only. 9. Made final cash disbursements to the partners based on the assumption that all partners other than Guthrie are personally solvent. Prepare journal entries to record these liquidation transactions. No General Journal Debit Credit Transaction 01 1 Cash Wingler, Capital Norris, Capital Rodgers, Capital Guthrie, Capital Accounts receivable 2 02 Cash Wingler, Capital Norris, Capital Rodgers, Capital Guthrie, Capital Land Building and equipment 3 03 Wingler, Capital Norris, Capital Rodgers, Loan Rodgers, Capital Cash 4 04 No journal entry required 5 05 Liabilities Cash 6 06 Cash Wingler, Capital Norris, Capital Rodgers, Capital Guthrie, Capital Inventory 7 07 Wingler, Capital Norris, Capital Rodgers, Capital Cash 8 08 Wingler, Capital Norris, Capital Rodgers, Capital Guthrie, Capital Cash 9 9.a Wingler, Capital Norris, Capital Rodgers, Capital Guthrie, Capital 10 9.b Wingler, Capital Norris, Capital Rodgers, Capital Cash