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 $ 65,000 237,000 Liabilities Frick, capital (60%) Wilson, capital (20%) Clarke, capital (20%) Total liabilities and capital $ 42,000 141,000 38,000 81,000 $302,000 Total assets $302,000 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 $100,000 for $65,000. 3. Paid all liabilities. 4. Distributed safe payments of cash again. 5. Sold remaining noncash assets for $54,000. 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 C Prepare a predistribution plan for this partnership. Frick, Capital Wilson, Capital Clarke, Capital 0 0 0 Beginning balances Assumed loss of Schedule 1 Step one balances Assumed loss of Schedule 2 Step two balances Assumed loss of Schedule 3 Step three balances 0 0 0 0 0 0 Statement of Partnership Liquidation Final Balances Cash Noncash Assets Liabilities Frick, Capital (60%) $ 141,000 Wilson, Capital (20%) $ 38,000 Clarke, Capital (20%) $ 81,000 $ 65,000 $ 237,000 $ 42,000 $ 65,000 $ 237,000 $ 42,000 $ 141.000 $ 38,000 $ 81,000 Beginning balances Distribution Updated balances Noncash assets sold Updated balances Liabilities paid Updated balances First (remainder of first distribution) $ 65,000 $ 237,000 $ 42,000 $ 141,000 $ 38,000 $ 81,000 $ 65,000 $ 237,000 s 42,000 $ 141,000 $ 38,000 $ 81,000 Next $ 65,000 $ 237,000 $ 42,000 $ 141,000 $ 38,000 $ 81,000 $ 65,000 $ 237,000 $ 42,000 $ 141,000 $ 38,000 $ 81,000 Next Updated balances Noncash assets sold Updated balances Liquidation expenses paid Updated balances Final distribution based on ending capital account balances Ending balance $ 65,000 $ 237,000 $ 42,000 $ 141,000 $ 38,000 $ 81,000 $ 65,000 $ 237,000 $ 42,000 $ 141,000 $ 38,000 $ 81,000 Required A Required B Required C 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.) No Transaction General Journal Debit Credit 1 1 Clarke, Capital Cash 2 2 Cash Frick, Capital Wilson, Capital Clarke, Capital Noncash assets 3 3 Liabilities Cash 4 4 Frick, Capital Wilson, Capital Clarke, Capital Cash 5 5 Cash Frick, Capital Wilson, Capital Clarke, Capital Noncash assets OOOOOOOOOOOOO 6 6 Frick, Capital Wilson, Capital Clarke, Capital Cash 7 7 Frick, Capital Wilson, Capital Clarke, Capital Cash
