The partnership of Etan, Kazuo, & Cole has experienced operating losses for three consecutive years. The partners-who have shared profits and losses in the ratio of Etan, 10%; Kazuo, 70%; and Cole, 20%-are liquidating the business. They ask you to analyze the effects of liquidation. They present the following condensed partnership balance sheet at December 31, 2016:

Requirements
1. Assume the non-cash assets are sold for $165,000. Journalize the liquidation transactions.
2. Assume the non-cash assets are sold for $80,000. Journalize the liquidation transactions.

Transcribed Image Text:

ETAN, KAZUO, &COLE Balance Sheet December 31, 2016 Assets Liabilities $ 27,000 Accounts Payable Cash Non-cash Assets 56,000 120,000 Partners' Equity Etan, Capital Kazuo, Capital Cole, Capital Total Partners' Equity 7,000 50,000 24,000 91,000 $147,000 Total Assets S 147,000 Total Liabilities and Partners' Equity