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 $9,000. At the date the partnership ceases operations, the balance sheet is as follows: Cash $ 70,000 Liabilities $ 50,000 Noncash assets 290,000 Alex, capital 203,000 Bess, capital 107,000 Total assets $ 360,000 Total liabilities and capital $ 360,000 Part A: Prepare journal entries for the following transactions that occurred in chronological order: Distributed safe cash payments to the partners. Paid $30,000 of the partnership’s liabilities. Sold noncash assets for $310,000. Distributed safe cash payments to the partners. Paid remaining partnership liabilities of $20,000. Paid $7,100 in liquidation expenses; no further expenses will be incurred. Distributed remaining cash held by the business to the partners. Part B: Prepare a final statement of partnership liquidation. cash non-cash assets liabilities alex(capital) bess (capital)Beginning balancedistribution to partnerspaid liabilitiessold noncash assetsupdated balancesdistribution to partnersupdated balancespaid liabilitiespaid liquidation expensesupdated balancesdistribution to partnersclosing balances
Alex and Bess have been in
Cash | $ | 70,000 | Liabilities | $ | 50,000 |
Noncash assets | 290,000 | Alex, capital | 203,000 | ||
Bess, capital | 107,000 | ||||
Total assets | $ | 360,000 | Total liabilities and capital | $ | 360,000 |
Part A: Prepare
- Distributed safe cash payments to the partners.
- Paid $30,000 of the partnership’s liabilities.
- Sold noncash assets for $310,000.
- Distributed safe cash payments to the partners.
- Paid remaining partnership liabilities of $20,000.
- Paid $7,100 in liquidation expenses; no further expenses will be incurred.
- Distributed remaining cash held by the business to the partners.
Part B: Prepare a final statement of partnership liquidation. cash non-cash assets liabilities alex(capital) bess (capital)Beginning balancedistribution to partnerspaid liabilitiessold noncash assetsupdated balancesdistribution to partnersupdated balancespaid liabilitiespaid liquidation expensesupdated balancesdistribution to partnersclosing balances
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