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The partnership of Frick, Wilson, and Clarke has elected to cease all operations and liquidate its business property. A balance sheet drawn up at this
The partnership of Frick, Wilson, and Clarke 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 | $ 75,000 | Liabilities | $ 40,000 | |
Noncash assets | 309,000 | Frick, capital (60%) | 189,000 | |
Wilson, capital (20%) | 50,000 | |||
Clarke, capital (20%) | 105,000 | |||
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Total assets | $384,000 | Total liabilities and capital | $384,000 | |
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Part A |
Prepare a predistribution plan for this partnership |
Part B | |
The following transactions occur in liquidating this business: |
1. | Distributed cash based on safe capital balances immediately to the partners. Liquidation expenses of $10,000 are estimated as a basis for this computation. |
2. | Sold noncash assets with a book value of $124,000 for $75,000. |
3. | Paid all liabilities. |
4. | Distributed cash based on safe capital balances again. |
5. | Sold remaining noncash assets for $66,000. |
6. | Paid actual liquidation expenses of $8,000 only. |
7. | Distributed remaining cash to the partners and closed the financial records of the business permanently. |
Produce a final statement of liquidation for this partnership using the predistribution plan to determine payments of cash to partners based on safe capital balances. (Do not round intermediate calculations.) |
Part C |
Prepare journal entries to record the liquidation transactions reflected in the final statement of liquidation. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) |
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