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The partnership of Wing, Mehta, Rodgers, and Yan was formed several years ago as a local architectural firm. Several partners have recently undergone personal financial
The partnership of Wing, Mehta, Rodgers, and Yan was formed several years ago as a local architectural firm. Several partners have recently undergone personal financial problems and have decided to terminate operations and liquidate the business. The following balance sheet is drawn up as a guideline for this process:
Cash $ Liabilities $
Accounts receivable Rodgers, loan
Inventory Wing, capital
Land Mehta, capital
Building and equipment net Rodgers, capital
Yan, capital
Total assets $ Total liabilities and capital $
When the liquidation commenced, liquidation expenses of $ were anticipated as being necessary to dispose of all property.
Required:
Part A
Prepare a predistribution plan for this partnership.
Part B
The following transactions transpire during the liquidation of the Wing, Mehta, Rodgers, and Yan partnership:
Collected percent of the total accounts receivable with the rest judged to be uncollectible.
Sold the land, building, and equipment for $
Distributed safe payments of cash.
Learned that Yan, who has become personally insolvent, will make no further contributions.
Paid all liabilities.
Sold all inventory for $
Distributed safe payments of cash again.
Paid actual liquidation expenses of $ only.
Made final cash disbursements to the partners based on the assumption that all partners other than Yan are personally solvent.
Prepare journal entries to record these liquidation transactions.
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