he 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 $ 40,000 Noncash assets 219,000 Frick, capital (60%) 129,000 Wilson, capital (20%) 35,000

College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter19: Accounting For Partnerships
Section: Chapter Questions
Problem 5CE
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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

$ 40,000

Noncash assets

219,000

Frick, capital (60%)

129,000

Wilson, capital (20%)

35,000

    

Clarke, capital (20%)

  75,000

Total assets

$279,000

Total liabilities and capital

$279,000

Part A

Prepare a predistribution plan for this partnership.

Part B

The following transactions occur in liquidating this business:

Distributed safe payments of cash immediately to the partners. Liquidation expenses of $8,000 are estimated as a basis for this computation.

Sold noncash assets with a book value of $94,000 for $60,000.

Paid all liabilities.

Distributed safe payments of cash again.

Sold remaining noncash assets for $51,000.

Paid actual liquidation expenses of $6,000 only.

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.

 

 

*please show all work with calculations please***

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