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 $ 43,000 Noncash assets 207,000 Frick, capital (60%) 120,000 Wilson, capital (20%) 33,000 Clarke, capital (20%) 71,000 Total assets $ 267,000 Total liabilities and capital $ 267,000 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 $10,000 are estimated as a basis for this computation. Sold noncash assets with a book value of $90,000 for $60,000. Paid all liabilities. Distributed cash based on safe capital balances again. Sold remaining noncash assets for $49,000. Paid actual liquidation expenses of $8,000 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.
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