Journalizing the liquidation of a partnership firm. The partners of the RichMax

Question

Journalizing the liquidation of a partnership firm. The partners of the RichMax Company decide to liquidate the firm on 3/31/08. RichMax Company Balance Sheet Assets Liabilities and Owners Equity Cash $30,000 Notes Payable $17,000 Accounts Receivable 33,000 Accounts Payable 24,000 Allowance for Doubtful A/C (2,000) Wages Payable 2,000 Merchandise Inventory 24,000 Rich, Capital 22,000 Equipment 10,000 Max, Capital 21,000 Accumulated Depreciation, Eqt (8,000) Rudy, Capital 1,000 Total $87,000 Total $87,000 The partners share income and loss in the ratio 1:2:3. During the process of liquidation, the following transactions were completed. a. A total of $42,000 was received from the sale of all of the non-cash assets. b. Liabilities were paid in full. c. Rudy was unable to pay his capital deficiency. d. The final cash distribution was made to the partners. PREPARE THE JOURNAL ENTRIES TO RECORD THE LIQUIDATION

Explanation / Answer

c. Rudy was unable to pay his capital deficiency.

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