The partnership of Bauer, Ohtani, and Souza 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	$ 63,000	Liabilities	$ 37,000
Noncash assets	255,000	Bauer, capital (60%)	153,000
		Ohtani, capital (20%)	41,000
		Souza, capital (20%)	87,000
Total assets	$ 318,000	Total liabilities and capital	$ 318,000

Required:

Part B

The following transactions occur in liquidating this business:

1. Distributed safe payments of cash immediately to the partners. Liquidation expenses of $7,000 are estimated as a basis for this computation.
2. Sold noncash assets with a book value of $106,000 for $63,000.
3. Paid all liabilities.
4. Distributed safe payments of cash again.
5. Sold remaining noncash assets for $57,000.
6. Paid actual liquidation expenses of $5,000 only.
7. Distributed remaining cash to the partners and closed the financial records of the business permanently.

BAUER, OHTANI, AND SOUZA
Statement of Partnership Liquidation
Final Balances
	Cash	Noncash Assets	Liabilities	Bauer, Capital (60%)	Ohtani, Capital (20%)	Souza, Capital (20%)
Beginning balances	$63,000	$255,000	$37,000	$153,000	$41,000	$87,000
Distribution	(19,000)selected answer correct	0selected answer correct	0selected answer correct	0selected answer correct	0selected answer correct	(19,000)selected answer correct
Updated balances	$44,000not attempted	$255,000	$37,000	$153,000	$41,000	$68,000
Noncash assets sold	63,000selected answer correct	(106,000)selected answer correct	0selected answer correct	(25,800)selected answer correct	(8,600)selected answer correct	(8,600)selected answer correct
Updated balances	$107,000	$149,000	$37,000	$127,200	$32,400	$59,400
Liabilities paid	(37,000)selected answer correct	0selected answer correct	(37,000)selected answer correct	0selected answer correct	0selected answer correct	0selected answer correct
Updated balances	$70,000	$149,000	$0	$127,200	$32,400	$59,400
First (remainder of first distribution)	0selected answer incorrect	0selected answer correct	0selected answer correct	not attempted	not attempted	not attempted
Next	0selected answer incorrect	0selected answer correct	0selected answer correct	not attempted	not attempted	not attempted
Next	0selected answer incorrect	0selected answer correct	0selected answer correct	not attempted	not attempted	not attempted
Updated balances	$70,000	$149,000	$0	$127,200	$32,400	$59,400
Noncash assets sold	57,000selected answer correct	(149,000)selected answer correct	0selected answer correct	(55,200)selected answer correct	(18,400)selected answer correct	(18,400)selected answer correct
Updated balances	$127,000	$0	$0	$72,000	$14,000	$41,000
Liquidation expenses paid	(5,000)selected answer correct	0selected answer correct	0selected answer correct	(3,000)selected answer correct	(1,000)selected answer correct	(1,000)selected answer correct
Updated balances	$122,000	$0	$0	$69,000	$13,000	$40,000
Final distribution based on ending capital account balances	0selected answer incorrect	0selected answer correct	0selected answer correct	0selected answer incorrect	0selected answer incorrect	0selected answer incorrect
Ending balance	$122,000	$0	$0	$69,000	$13,000	$40,000

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

Part C

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

A

Record the entry for initial cash payments made to partners in accordance with predistribution plan.

B

Record the sale of noncash assets with a book value of $106,000 for $63,000.

C

Record the extinguishment of all partnership liabilities.

D

Record the entry for cash payments made to partners in accordance with predistribution plan.

E

Record the sale of the remaining noncash assets for $57,000.

F

Record the payment of liquidation expenses.

G

Record the entry for final cash payments made to partners based on ending capital balances.