Question

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:

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.

Answer 1