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	$	66,000		Liabilities	$	46,000
Noncash assets		231,000		Frick, capital (60%)		135,000
				Wilson, capital (20%)		37,000
				Clarke, capital (20%)		79,000
Total assets	$	297,000		Total liabilities and capital	$	297,000

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

• 1 Record the entry for initial cash payments made to partners in accordance with predistribution plan.

• 2 Record the allocation of losses to partners on sale of noncash assets.

• 3 Record the extinguishment of all partnership liabilities.

• 4 Record the entry for cash payments made to partners in accordance with predistribution plan.

• 5 Record the allocation of losses to partners on sale of remaining noncash assets.

• 6 Record the payment of liquidation expenses.

• 7 Record the entry for final cash payments made to partners based on ending capital balances.

***Please number the journal entries, thanks!

Answer 1

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Frick capital Wilson capital Clarke Capital Cash To record the payment of liquidation expense) Frick capital Wilson capital Clarke Capital Cash To record the final cash payment to partners) 6) 4800 1600 1600 8000 7) 33000 11000 11000 55000