Question

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 $ 64,000   Liabilities $ 44,000   Noncash assets 225,000   Frick, capital (60%) 132,000   Wilson, capital (20%) 36,000   Clarke, capital (20%) 77,000        Total assets $289,000        Total liabilities and capital $289,000

Part A Prepare a predistribution plan for this partnership
Frick, Capital Wilson, Capital Clarke, Capital Beginning balances Loss Step one balances 0 0 0 Loss Step two balances 0 0 0 Loss Step three balances 0 0 0 Part B The following transactions occur in liquidating this business: 1. Distributed cash based on safe capital balances immediately to the partners. Liquidation expenses of $9,000 are estimated as a basis for this computation. 2. Sold noncash assets with a book value of $96,000 for $64,000. 3. Paid all liabilities. 4. Distributed cash based on safe capital balances again. 5. Sold remaining noncash assets for $52,000. 6. Paid actual liquidation expenses of $7,000 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 based on safe capital balances. (Do not round intermediate calculations.) FRICK, WILSON, AND CLARKE Schedule of Partnership Liquidation Final Balances Cash Noncash Assets Liabilities Frick, Capital (60%) Wilson, Capital (20%) Clarke, Capital (20%) Beginning balances $64,000 $225,000 $44,000 $132,000 $36,000 $77,000 Distribution Updated balances $64,000 $225,000 $44,000 $132,000 $36,000 $77,000 Noncash assets sold Updated balances $64,000 $225,000 $44,000 $132,000 $36,000 $77,000 All liabilities are paid Updated balances $64,000 $225,000 $44,000 $132,000 $36,000 $77,000 First (remainder of first distribution) Next Next Updated balances $64,000 $225,000 $44,000 $132,000 $36,000 $77,000 Noncash assets sold Updated balances $64,000 $225,000 $44,000 $132,000 $36,000 $77,000 Paid liquidation expenses Updated balances $64,000 $225,000 $44,000 $132,000 $36,000 $77,000 Final distribution based on ending capital account balances Ending balance $64,000 $225,000 $44,000 $132,000 $36,000 $77,000

Part C

Prepare journal entries to record the liquidation transactions reflected in the final statement of liquidation. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal entry worksheet Record the entry for initial cash payments made to partners in accordance with predistribution plan. Note: Enter debits before credits. 7 journal entries Transaction General Journal Debit Credit 1

Answer 1