Question

Check my work Alex and Bess have been in partnership for many years. The partners, who share profits and losses on a 70:30 basis, respectively, wish to retire and have agreed to liquidate the business. Liquidation expenses are estimated to be $7,500. At the date the partnership ceases operations, the balance sheet is as follows: Cash Noncash assets $ 67,000 260,000 Liabilities Alex, capital Bess, capital Total liabilities and capital $ 48,500 182,000 96,500 $ 327,000 Total assets $ 327,000 Part A: Prepare journal entries for the following transactions: a. Distributed safe cash payments to the partners. b. Paid $29,100 of the partnership’s liabilities. C. Sold noncash assets for $278,500. d. Distributed safe cash payments to the partners. e. Paid remaining partnership liabilities of $19,400. f. Paid $5,900 in liquidation expenses; no further expenses will be incurred. g. Distributed remaining cash held by the business to the partners. Part B: Prepare a final statement of partnership liquidation.

Answer 1

Part A
Particulars	Possible loss	Alex	Bess
Capital		$           182,000	$ 96,500
Assumed Losses (Non cash assets)	$      260,000	$          -182,000	$ -78,000
Sub total		$                     -	$ 18,500
Safe payments		$                     -	$ 11,000
General Journal	Debit	Credit
Bess's Capital	$        11,000
Cash		$             11,000
Liabilities	$        29,100
Cash		$             29,100
Cash	$      278,500
Non Cash Asset		$           260,000
Gain on Realization		$             18,500
Gain on Realization	$        18,500
Alex Capital 18500 x 7/10		$             12,950
Bess Capital 18500 x 3/10		$               5,550
Cash Balance (67000-11000-29100+278500)		$                305,400
Estimated cash after setting of creditors and liquidation Expenses = 305400-(48,500-29,100)-7500		$                278,500
Particulars	Possible loss	Alex	Bess
Capital at beginning		$           182,000	$ 96,500
Less safe payments		$                     -	$ -11,000
Add Share of realized gain		$             12,950	$    5,550
Sub total		$           194,950	$ 91,050
safe payment in proportion of capital
Alex	Bess
278500*194950/286000	278500*91050/286000
$                                      189,838	$                                      88,662
Particulars	Debit	Credit
Alex Capital	$      189,838
Bess Capital	$        88,662
Cash		$           278,500
Liabilities	$        19,400
Cash		$             19,400
Liquidation Expenses	$          5,900
Cash		$               5,900
Alex Capital 5900*5112/7500	$          4,021
Bess Capital 5900*2388/7500	$          1,879
Liquidation Expenses		$               5,900
Cash Available for final distribution (305400-278500-19400-5900)		$                    1,600
Capital Ratio
Alex Capital	$          1,091
Bess Capital	$             509
Cash		$               1,600

Part B
Particulars	Cash	Non Cash Asset	Liabilities	Alex	Bess
Opening Balance	$        67,000	$           260,000	$ 48,500	$       182,000	96,500
Distribution to partners	$       -11,000				-11000
Liabilities Paid	$       -29,100		$ -29,100
Non Cash Asset Sold	$      278,500	$          -260,000		$         12,950	5550
Updated Balance	$      305,400	$                     -	$ 19,400	$       194,950	91050
Distribution to partners	$     -278,500			$      -189,838	-88662
Updated Balance	$        26,900	$                     -	$ 19,400	$           5,112	2388
Paid Liabilities	$       -19,400		$ -19,400
Paid Liquidation Exp	$         -5,900			$          -4,021	-1879
Updated Balance	$          1,600	$                     -	$          -	$           1,091	509
Distribution to partners	$         -1,600			$          -1,091	-509
Closing Balance	$                -	$                     -	$          -	$                 -	0