The partnership of Bauer, Ohtani, and Souza has elected to cease all operations and liquidate its business
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Question:
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 $ Liabilities $
Noncash assets Bauer, capital
Ohtani, capital
Souza, capital
Total assets $ Total liabilities and capital $
Required:
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 $ are estimated as a basis for this computation.
Sold noncash assets with a book value of $ for $
Paid all liabilities.
Distributed safe payments of cash again.
Sold remaining noncash assets for $
Paid actual liquidation expenses of $ only.
Distributed remaining cash to the partners and closed the financial records of the business permanently.
Prepare 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.
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 $ for $
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 $
F Record the payment of liquidation expenses.
G Record the entry for final cash payments made to partners based on ending capital balances.
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