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Alex and Bess have been in partnership for many years. The partners, who share profits and losses on a 60:40 basis


Alex and Bess have been in partnership for many years. The partners, who share profits and losses on a 60:40 basis, respectively, wish to retire and have agreed to liquidate the business. Liquidation expenses are estimated to be $6,000. At the date the partnership ceases operations, the balance sheet is as follows:







Cash$64,000Liabilities$47,000
Noncash assets
230,000Alex, capital
138,000



Bess, capital
109,000
Total assets$294,000Total liabilities and capital$294,000


Part A: Prepare journal entries for the following transactions that occurred in chronological order:

  1. Distributed safe cash payments to the partners.

  2. Paid $28,200 of the partnership’s liabilities.

  3. Sold noncash assets for $247,000.

  4. Distributed safe cash payments to the partners.

  5. Paid remaining partnership liabilities of $18,800.

  6. Paid $4,700 in liquidation expenses; no further expenses will be incurred.

  7. Distributed remaining cash held by the business to the partners.


Part B: Prepare a final statement of partnership liquidation.



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