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

1.The following transactions occur in liquidating this business:

2. Distributed safe payments of cash immediately to the partners. Liquidation expenses of $10,000 are estimated as a basis for this computation.

3. Sold noncash assets with a book value of $90,000 for $60,000.

4. Paid all liabilities.

5. Distributed safe payments of cash again.

6. Sold remaining noncash assets for $49,000.

7. Paid actual liquidation expenses of $8,000 only.

Distributed remaining cash to the partners and closed the financial records of the business permanently.

Part C

Prepare journal entries to record the liquidation transactions reflected in the final statement of liquidation.

Prepare a predistribution plan for this partnership.

A.

	Frick, Capital	Wilson, Capital	Clarke, Capital
Beginning balances	$120,000	$33,000	$71,000
Assumed loss of Schedule 1
Step one balances	120,000	33,000	71,000
Assumed loss of Schedule 2
Step two balances	120,000	33,000	71,000
Assumed loss of Schedule 3
Step three balances	120,000	33,000	71,000

B.

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	$207,000	$43,000	$120,000	$33,000	$71,000
Distribution
Updated balances	$60,000	$207,000	$43,000	$120,000	$33,000	$71,000
Noncash assets sold
Updated balances	$60,000	$207,000	$43,000	$120,000	$33,000	$71,000
Liabilities paid
Updated balances	$60,000	$207,000	$43,000	$120,000	$33,000	$71,000
First (remainder of first distribution)
Next
Next
Updated balances	$60,000	$207,000	$43,000	$120,000	$33,000	$71,000
Noncash assets sold
Updated balances	$60,000	$207,000	$43,000	$120,000	$33,000	$71,000
Liquidation expenses paid
Updated balances	$60,000	$207,000	$43,000	$120,000	$33,000	$71,000
Final distribution based on ending capital account balances
Ending balance	$60,000	$207,000	$43,000	$120,000	$33,000	$71,000

C. Journal entries