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 $53,000 Liabilities $39,000 NonCash assets 189,000 Frick, capital (60%) 108,000 Wilson, capital (20%) 30,000 Clarke, capital (20%) 65,000.
Total assets $242,000 Total liabilities and capital $242,000

Part A Prepare a pre-distribution plan for this partnership.

Part B The following transactions occur in liquidating this business:
1. Distributed safe payments of cash immediately to the partners. Liquidation expenses of $7,000 are estimated as a basis for this computation.
2. Sold non-cash assets with a book value of $84,000 for $53,000.
3. Paid all liabilities.

4. Distributed safe payments of cash again.

5. Sold remaining noncash assets for $46,000.

6. Paid actual liquidation expenses of $5,000 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.

Part C Prepare journal entries to record the liquidation transactions reflected in the final statement of liquidation.

Answer 1

Poshculats To balance Amore particulars bld To Realisation alloy 39000 53000 By Realisation 99000 Hability pold By Realisation ospense paid SOOD By Frick capital By wilson Capital By clarke capital S1000 llooo 46000 152000 152000

Journal Particulars OCH A Chetta OULD 19000 184000 Realisation To Che asset except cash trooster to Realischios alcout) Hability areant Dr To Realisation Chrability ALD Thangfered FO Realisation accom) Realisation account or 34000 39000 S000 10 cam aleant 5 000 (payment of sseponse of realisation) Realisation aleont 39000 39000 cash 99000 99000 To (paymes o liability) cam aleant Dr. To Realisation Cassel realised) Frick capital allout OL wilson capital allout D2 Clark capital allout as To Realisation م SToOo 1900 19000 9 Sooo Closs Transfered to partners capital) Frick Capthal all Ds. wilson Capita areous bs. Clarke capital allout Br. to cash (final payment mode) S lodo T1000 46000 108,00 57 Hooo 5,740

Realischios مارال طامد Non arh assef liability expense bos seatischoo 184000 39.000 particulars Aman 34000 waviding asser Non cash asset sold 99 po ( 53000 + 46000 SOOD Stooo Capital los F Wilson Clarke 19000 4 SOOO 293000 233000 Paynees capital allout PL Parsiculars Frick Wilson clarke parnicnoy Puck wilson Clarke By balance CH 108000 30000 65000 To Realisation stooo 19000 19000 10 cash Slooo 11ooo 46000 1080 Bpoo 65000 103000 30000 650
The partners ratio 0f frick 60% wilson 20% and Clark 20% that is 6:2:2 that's substarct again and its ratio is equal to 3:1:1.