Question
[The following information applies to the questions displayed below.] The partnership of Butler, Osman, and Ward was formed several years ago as a local tax
[The following information applies to the questions displayed below.]
The partnership of Butler, Osman, and Ward was formed several years ago as a local tax preparation firm. Two partners have reached retirement age, and the partners have decided to terminate operations and liquidate the business. Liquidation expenses of $52,000 are expected. The partnership balance sheet at the start of liquidation is as follows:
Cash | $ | 48,000 | Liabilities | $ | 188,000 | ||
Accounts receivable | 78,000 | Butler, loan | 48,000 | ||||
Office equipment (net) | 68,000 | Butler, capital (25%) | 140,000 | ||||
Building (net) | 200,000 | Osman, capital (25%) | 48,000 | ||||
Land | 190,000 | Ward, capital (50%) | 160,000 | ||||
Total assets | $ | 584,000 | Total liabilities and capital | $ | 584,000 | ||
The following transactions transpire in chronological order during the liquidation of the partnership:
A.
-
Paid all liabilities in full.
-
Paid actual liquidation expenses of $39,000 only.
-
Made final cash distributions to the partners.
B. Prepare a predistribution plan for this partnership.
Butler,Loan and capital Osman capital ward capital
Beginning balances
Assumed loss of schedule 1
Step One balances
Assumed loss of schedule 2
Step two balances
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