Lump-Sum Liquidation
Matthews, Mitchell, and Michaels are partners in the BG Land Development Company and share losses in a 5:3:2 ratio. The balance sheet on June 30,20X1, when they decide to liquidate the business, is as follows:
Assets | Liabilities and Capital | ||
Cash | $ 20,000 | Accounts Payable $ | 30,000 |
Noncash Assets | 150,000 | Mitchell, Loan | 10,000 |
|
| Matthews, Capital | 80,000 |
|
| Mitchell, Capital | 36,000 |
|
| Michaels, Capital | 14,000 |
Total Assets | $170,000 | Total Liabilities and Equities | $ 170,000 |
The noncash assets are sold for $110,000.
Required
a. Prepare a statement of partnership realization and liquidation.
b. Prepare the required journal entries to account for the liquidation of the BG Land Development Company.
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