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 $ 69,000 285,000 Liabilities Frick, capital (60%) Wilson, capital (20%) Clarke, capital (20%) Total liabilities and capital $ 40,000 171,000 46,000 97,000 $354,000 Total assets $354,000 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 $116,000 for $69,000. 3. Paid all liabilities. 4. Distributed safe payments of cash again. 5. Sold remaining noncash assets for $62,000. 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 Required A. Required B Required c Produce a final statement of liquidation for this partnership using the predistribution plan to determine payments of cash to partners. (Do not round intermediate calculations.) FRICK, WILSON, AND CLARKE Statement of Partnership Liquidation Final Balances Cash Noncash Assets Liabilities Frick, Capital (60%) Wilson, Clarke, Capital Capital (20%) (20%) $ 46,000 $ 97,000 $ 69,000 $ 285.000 $ 40,000 $ 171,000 $ 69,000 $ 285,000 $ 40,000 $ 171,000 $ 46,000 $ 97,000 $ 69,000 $ 285,000 $ 40,000 $ 171,000 $ 46,000 $ 97,000 $ 69,000 $ 285,000 $ 40,000 $ 171,000 $ 46,000 $ 97,000 Beginning balances 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 $ 69,000 $285,000 $ 40,000 $ 171.000 $ 46.000 $ 97.000 $ 69,000 $ 285,000 $ 40,000 $ 171,000 $ 46,000 $ 97,000 $ 69,000 $ 285,000 $ 40,000 $ 171,000 $ 46,000 $ 97,000 $ 69,000 $ 285,000 $ 40,000 $ 171,000 $ 46,000 $ 97,000 Required A Required B Required Prepare journal entries to record the liquidation transactions reflected in the final statement of liquid transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the entry for initial cash payments made to partners in accordance with predistribution plan. Note: Enter debits before credits. General Journal Debit Credit Transaction 1 Record entry Clear entry View general journal Journal entry worksheet 1 2 3 4 5 6 7 > Record the allocation of losses to partners on sale of noncash assets. Note: Enter debits before credits. General Journal Debit Credit Transaction 2 Record entry Clear entry View general journal Journal entry worksheet 1 2 3 4 5 6 7 Record the extinguishment of all partnership liabilities. Note: Enter debits before credits. General Journal Debit Credit Transaction 3 Record entry Clear entry View general journal Journal entry worksheet Record the entry for cash payments made to partners in accordance with predistribution plan. Note: Enter debits before credits. General Journal Debit Credit Transaction 4 Record entry Clear entry View general journal Journal entry worksheet Record the allocation of losses to partners on sale of remaining noncash assets. Note: Enter debits before credits. General Journal Debit Credit Transaction 5 Record entry Clear entry View general journal Journal entry worksheet Record the payment of liquidation expenses. Note: Enter debits before credits. General Journal Debit Credit Transaction 6 Record entry Clear entry View general journal Journal entry worksheet 1 2 3 4 5 6 7 Record the entry for final cash payments made to partners based on ending capital balances. Note: Enter debits before credits. General Journal Debit Credit Transaction 7 Record entry Clear entry View general journal
