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 Noncash assets $ 64,000 261,000 Liabilities Frick, capital (60%) Wilson, capital (20%) Clarke, capital (20%) Total liabilities and capital $ 38,000 156,000 42,000 89,000 $325,000 Total assets $325,000 Part A Prepare a predistribution plan for this partnership. Part B The following transactions occur in liquidating this business: 1. Distributed safe payments of cash immediately to the partners. Liquidation expenses of $8,000 are estimated as a basis for this computation. 2. Sold noncash assets with a book value of $108,000 for $64,000. 3. Paid all liabilities. 4. Distributed safe payments of cash again. 5. Sold remaining noncash assets for $58,000. 6. Paid actual liquidation expenses of $6,000 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. Part C Prepare journal entries to record the liquidation transactions reflected in the final statement of liquidation. Required A Required B Required Produce a final statement of liquidation for this partnership using the predistribution plan to determine payments of cash to partners. (Do not round intermediate calculations.) FRICK, WILSON, AND CLARKE Statement of Partnership Liquidation Final Balances Cash Noncash Assets Liabilities 38,000 0 38,000 Beginning balances Distribution Updated balances Noncash assets sold Updated balances Liabilities paid Updated balances First (remainder of first distribution) Next Next Updated balances Noncash assets sold Updated balances Liquidation expenses paid Updated balances Final distribution based on ending capital account balances Ending balance $ 64,000 $ 261.000 (18,000) 0 $ 46,000 $ 261,000 64.000 108,000 $110,000 $ 153,000 (38,000) $ 72,000 $ 153,000 0 X 0 0 % 0 0X 0 $ 72,000 $ 153,000 64,000 X 108,000 Frick, Wilson, Clarke, Capital Capital Capital (60%) (20%) (20%) $ 156,000 $ 42,000 $ 89,000 0 0 (18,000) $ 156,000 $ 42,000 $ 71,000 26,400 8,800 8,800 $ 129,600 $ 33,200 $ 62,200 0 0 0 $ 129,600 $ 33,200 $ 62,200 0 0 0 X 0X 0 0 % 0 X 0 X 0 X $ 129,600 $ 33,200 $ 62,200 26.400 X 8,800 X 8,800 X 0 38,000 (38,000) $ 0 0 0 0 $ 0 0 1 $ 45,000 $ 0 $ 103,200 $ 24,400 136,000 (6.000) $ 53,400 (1,200) 0 0 (3.600) (1,200) $ 45,000 $ 0 $ 99,600 $ 23,200 $ 52,200 130,000 (66,000) $ 64,000 0 34,200 65,400 11,400 X 20,400 X $ 11,800 $ 31,800 $ 45,000 $ 0 $ Required A Required B Required 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.) Transaction General Journal Debit Credit Clarke, Capital 18,000 18,000 No 1 1 Cash 2 2 Frick, Capital Wilson, Capital Clarke, Capital Cash OOOOO 26,400 8,800 8,800 64,000 Noncash assets 108,000 3 3 38,000 Liabilities Cash >> 38.000 4 4 Frick, Capital Wilson, Capital Clarke, Capital Cash 57,000 19,000 19,000 95,000 X un 5 5 Cash 57,000 Frick, Capital Wilson, Capital Clarke, Capital Noncash assets OOO OOOOO OOO 6 6 Frick, Capital Wilson, Capital Clarke, Capital Cash 7 7 Frick, Capital Wilson, Capital Clarke, Capital Cash OOOO 34,200 11,400 20,400 66,000
