Question

The partnership of Butler, Osman, and Ward was formed several years as a local tax preparation firm. Two partners have reached retirement age and the partners have decided to terminate operations and liquidate the business. Liquidation expenses of $50,000 are expected. The partnership balance sheet at the start of liquidation is as follows:

Cash	$	46,000		Liabilities	$	186,000
Accounts receivable		76,000		Butler, loan		46,000
Office equipment (net)		66,000		Butler, capital (25%)		130,000
Building (net)		190,000		Osman, capital (25%)		46,000
Land		180,000		Ward, capital (50%)		150,000
Total assets	$	558,000		Total liabilities and capital	$	558,000

Prepare a predistribution plan for this partnership - I have already done this part: see below

	Bulter, Loan and Capital	Osman, Capital	Ward, Capital
Beg bal.	176,000	46,000	150,000
Loss	46,000	46,000	92,000
Step one bal.	130,000	0	58,000
Loss	29,000		58,000
Step two bal.	101,000	0	0

The following transactions transpire in chronological order during the liquidation of the partnership:

1. Collected 90 percent of the accounts receivable and wrote the remainder off as uncollectible.

2. Sold the office equipment for $28,000, the building for $142,000, and the land for $184,000.

3. Made safe capital distributions.

4. Paid all liabilities in full.

5. Paid actual liquidation expenses of $38,000 only.

6. Made final cash distributions to the partners.

-- I really only need help with number 3 and number 6. Thank you.  

Answer 1

Journal Entries 1 Cash A/c Dr 68400 To Realisation 68400 ( 90% of Account receivable) 2 Cash A/c Dr 354000 To Realisation 354000 ( Realised from office equip, building and land) 3 Butler Loan a/c Dr 46000 To Cash 46000 (first bulter loan to be paid) 4 Realisation a/c Dr 186000 To Cash 186000 ( Liabilities paid) 5 Reliasation a/c dr 38000 To Cash 38000 6 loss entry Bulter capital a/c     Dr (25%) 31900 Osman Capital a/c Dr (25%) 31900 Ward Capital a/c Dr (50%) 63800 To Realisation 127600 Final cash distributions Bulter capital a/c     Dr 98100 Osman Capital a/c Dr 14100 Ward Capital a/c Dr 86200 To Cash 198400	STATEMENT OF LIABILITIES DISTRIBUTION
			Laibilities	Bulter loan
	Balance		186,000	46,000
Total availabiltiy
Cash	46,000
Collections	422,400
	468,400
Less:
Expected exp	50,000
Laibilities	186,000		186,000	-
Balance	232,400		-	46,000
Less :
Bulter loan	46,000		-	46,000
Balance carry forward to partners	186,400		-	-
	STATEMENT OF CAPITAL DISTRIBUTION
		BUTLER	OSMAN	WARD
CAPITAL BALANCE		130,000	46,000	150,000
Available balance	186,400
Add: exp saved	12,000
(50000 - Actual 38000)
last balance	198,400
CAPITAL BALANCE	326,000
maximum loss (25:25:50)	127,600	31,900	31,900	63,800
Distribution to partners		98,100	14,100	86,200

Journal Entries 1 Cash A/c Dr 68400 To Realisation 68400 ( 90% of Account receivable) 2 Cash A/c Dr 354000 To Realisation 354000 ( Realised from office equip, building and land) 3 Butler Loan a/c Dr 46000 To Cash 46000 (first bulter loan to be paid) 4 Realisation a/c Dr 186000 To Cash 186000 ( Liabilities paid) 5 Reliasation a/c dr 38000 To Cash 38000 6 loss entry Bulter capital a/c     Dr (25%) 31900 Osman Capital a/c Dr (25%) 31900 Ward Capital a/c Dr (50%) 63800    To Realisation 127600 Final cash distributions Bulter capital a/c     Dr 98100 Osman Capital a/c Dr 14100 Ward Capital a/c Dr 86200 To Cash 198400 Realisation A/c To Assets By Laibilities 186000 Account Receivable 76000 office euip 66000 By Bank (Realised assets) Building 190000 Account Receivable 68400 Land 180000 office equi 28000 building 142000 To Bank land 184000 Laibilities 186000 exp 38000 By Loss 127600 736000 736000