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 | $ | 60,000 | Liabilities | $ | 40,000 | |
Noncash assets | 219,000 | Frick, capital (60%) | 129,000 | |||
Wilson, capital (20%) | 35,000 | |||||
Clarke, capital (20%) | 75,000 | |||||
Total assets | $ | 279,000 | Total liabilities and capital | $ | 279,000 | |
Part A
Prepare a predistribution plan for this partnership
Part B
The following transactions occur in liquidating this business:
Distributed cash based on safe capital balances immediately to the partners. Liquidation expenses of $8,000 are estimated as a basis for this computation.
Sold noncash assets with a book value of $94,000 for $60,000.
Paid all liabilities.
Distributed cash based on safe capital balances again.
Sold remaining noncash assets for $51,000.
Paid actual liquidation expenses of $6,000 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 based on safe capital balances.
Part C
Prepare journal entries to record the liquidation transactions reflected in the final statement of liquidation.
A.
Prepare a predistribution plan for this partnership
B.
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started