The partnership of Malkin, Neale, & Staal has experienced operating losses for three consecutive years. The partners, who have shared profits and losses in the ratio of Lisa Malkin, 20 percent, John Neale, 40 percent, and Brian Staal, 40 percent, are considering the liquidation of the business. They ask you to analyze the effects of liquidation under various assumptions about the sale of the noncash assets. They present the following partnership balance sheet amounts at December 31, 2014:

Required
1. Prepare a summary of liquidation transactions (as illustrated in the chapter) for each of the following situations:
a. The noncash assets are sold for $420,000.
b. The noncash assets are sold for $338,000.
2. Make the journal entries to record the liquidation transactions in requirement 1(b).

Transcribed Image Text:

Cash Noncash assets $ 41,000 Liabilities $151,000 57,500 158,500 41,000 367,000 Lisa Malkin, capital John Neale, capital Brian Staal, capital Total liabilities Total assets 5408,000and capital $408,000