Question
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$53,000. Liabilities$39,000
Noncash assets189,000. Frick, capital (60%)108,000
Wilson, capital (20%)30,000
Clarke, capital (20%)65,000
Total assets$242,000. Total liabilities and capital$242,000
Part A
Prepare a predistribution plan for this partnership.
Beg Bal
Loss Schedule 1
Step one balance
Loss schedule 2
step 2 balance
Loss schedule 3
Step 3 balance
Part B
The following transactions occur in liquidating this business:
- Distributed safe payments of cash immediately to the partners. Liquidation expenses of$7,000 are estimated as a basis for this computation.
- Sold noncash assets with a book value of $84,000 for $53,000.
- Paid all liabilities.
- Distributed safe payments of cash again.
- Sold remaining noncash assets for $46,000.
- Paid actual liquidation expenses of $5,000 only.
- 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.
PartC
Prepare journal entries to record the liquidation transactions reflected in the final statement of liquidation.
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