Question

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 $4,000. At the date the partnership ceases operations, the balance sheet is as follows: $ Cash Noncash assets 45,000 105,000 Liabilities Alex, capital Bess, capital Total liabilities and capital $ 34,500 73,500 42.000 $ 150,000 Total assets $ 150,eee Part A: Prepare journal entries for the following transactions: a. Distributed safe cash payments to the partners b. Paid $20,700 of the partnership's liabilities. c. Sold noncash assets for $115,500. d. Distributed safe cash payments to the partners, e. Paid remaining partnership liabilities of $13.800. 1. Paid $2,900 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 Complete this question by entering your answers in the tabs below. Required A Required B Prepare journal entries for the following transactions: (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required in the first account field.) a. Distributed safe cash payments to the partners b. Paid $20,700 of the partnership's liabilities. c. Sold noncash assets for $115,500. d. Distributed safe cash payments to the partners e. Paid remaining partnership liabilities of $13.800. 1. Paid $2,900 in liquidation expenses; no further expenses will be incurred. 9. Distributed remaining cash held by the business to the partners. Show less

Answer 1

JOURNAL ENTRIES

• Sold non-cash asset for $115,500 ② cash $115, 500 Al TO To Non-cash Profil on Do Asset Al liquickition $ 105,ooo $ 10,500 . Being Asset sold for profit) 2 Profit on Liquicktion the ..Dr $10,500 - To Partnership liquidation Al $10 500 Being profit transferred I PAYMENT OF PARTNERSHIP LIABILITIES OF $20,700 and $13,800 ③ Liability Al 34.500 - To Cash oke 34,500 [Being Liabilities paid ] • Payment of Liquidation expense. ☺ Parlnership aquication expense the Do 2900 To Cash All 2900 L for liquicktion expense payment] 6 Partnership liquidation Ale ... Dr 2900 - To Partnership liquidation expense Ale 2900

TRANSFER OF LIQUIDATION PROFIT to PARTNERS 6 Liquickition profit = $10,500 - $2900 bei = $7,600 Partnership ces To - To liquickition fl Plex cipital Beis capital ...Do score 7,600 5320 2280 • DISTRIBUTION OF BALANCE CATH Balance Cash = $45,000 + 115,5oot-34,500 - 2900 = 123, 100 2 Alex Bos Capital BiL 73,500 +5320 .Do Capital A/C L42,000 + 2280] . Dr. To Cash. 78820 44.280 123,100

PARTNERSHIP LIQUIDATION ACCOUNT

Debit Gedit 10,soo Profit on Liquickation Expense on Liquiclatius Alex capital Bass Capital 2900 5320 2280 TOTAL 10,500 1950o