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

	Frick, Capital	Wilson, Capital	Clarke, Capital
Beginning balances
Loss
Step one balances
Loss
Step two balances
Loss
Final balances

B.

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.)

FRICK, WILSON, AND CLARKE
Statement of Partnership Liquidation
Final Balances
	Cash	Noncash Assets	Liabilities	Frick, Capital (60%)	Wilson, Capital (20%)	Clarke, Capital (20%)
Beginning balances	$60,000	$219,000	$40,000	$129,000	$35,000	$75,000
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

C. 1. Record the entry for initial cash payments made to partners in accordance with predistribution plan. 2. Record the allocation of losses to partners on sale of noncash assets. 3. Record the extinguishment of all partnership liabilities. 4. Record the entry for cash payments made to partners in accordance with predistribution plan.

5. Record the allocation of losses to partners on sale of remaining noncash assets. 6. Record the payment of liquidation expenses. 7. Record the entry for final cash payments made to partners based on ending capital balances.