In: Accounting
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 | $ | 64,000 | Liabilities | $ | 47,000 |
Noncash assets | 230,000 | Alex, capital | 138,000 | ||
Bess, capital | 109,000 | ||||
Total assets | $ | 294,000 | Total liabilities and capital | $ | 294,000 |
Part A: Prepare journal entries for the following transactions that occurred in chronological order:
Distributed safe cash payments to the partners.
Paid $28,200 of the partnership’s liabilities.
Sold noncash assets for $247,000.
Distributed safe cash payments to the partners.
Paid remaining partnership liabilities of $18,800.
Paid $4,700 in liquidation expenses; no further expenses will be incurred.
Distributed remaining cash held by the business to the partners.
Part B: Prepare a final statement of partnership liquidation.