IThe following information applies to the questions displayed below) The followi
ID: 2394063 • Letter: I
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IThe following information applies to the questions displayed below) The following information applies to the questions displayed be Complete the following questions by preparing worksheet and jounat entries given below The partnership of Butler, Osman, and Ward was formed several years as a local tax preparation fim. Two partners retirement age and the partners have decided to terminate operations and liquidate are expected. The partnership balance sheet at the start of liquidation is as follows the business. Liquidation expenses of $58,000o 54 000Liablitjes 8400Butlen Loan Cash Accounts receivable Office equipnent (net) Building (net) Land 74,000 Butler, capital (25%) 230,000- Osman, capital (25%) zao.eee ward, capital (50%) 662 899Total 1abilitkes and capital % 194,000 54,000 170,000 54,000 19 8e 5 662,900 Total assets Prepare a predistribution plan for this partnership. Beginning balances Loss Step one balances Loss Step two balances 22 Next>Explanation / Answer
Predistrtribution Plan Butler, Loan & Capital Osman Capital Ward Capital Beginning Balance 224,000.00 54,000.00 190,000.00 Loss (54,000.00) (54,000.00) (108,000.00) Step One Balances 170,000.00 - 82,000.00 Loss (41,000.00) - (82,000.00) Step Two Balances 129,000.00 - Journal Entry Date Particulars Dr. Amt. Cr. Amt. 1. Cash 75,600.00 Butler, Capital 2,100.00 Osman, Capital 2,100.00 Ward, Capital 4,200.00 Accounts Receivable 84,000.00 (To record the accounts receivable received) 2 Cash 420,000.00 Butler, Capital 26,000.00 Osman, Capital 26,000.00 Ward, Capital 52,000.00 Office Equipment 74,000.00 Buildings 230,000.00 Land 220,000.00 (To record the sale of non cash assets and loss) 3 Butler, Capital 181,400.00 Osman, Capital 11,400.00 Ward, Capital 104,800.00 Cash 297,600.00 (To record the safe payment to Partners) 4 Butler, Capital 10,500.00 Osman, Capital 10,500.00 Ward, Capital 21,000.00 Cash 42,000.00 (To record the payment of Liquidation Expenses) 5 Butler, Capital 4,000.00 Osman, Capital 4,000.00 Ward, Capital 8,000.00 Cash 16,000.00 (To record the final payment to Partners) Statement of Partnership Realization and Liquidation Cash Accounts Receivable Other Assets Liabilities Capital Balances Butler Osman Ward Balance Before Liquidation, Jan 1, 20X1 54,000.00 84,000.00 524,000.00 194,000.00 224,000.00 54,000.00 190,000.00 Collection of Accounts Receivable at a Loss 75,600.00 (84,000.00) - (2,100.00) (2,100.00) (4,200.00) Sale of Equipment, Building & Land at a Loss 420,000.00 (524,000.00) (26,000.00) (26,000.00) (52,000.00) 549,600.00 - - 194,000.00 195,900.00 25,900.00 133,800.00 Safe Payment to Partners (297,600.00) (181,400.00) (11,400.00) (104,800.00) 252,000.00 - - 194,000.00 14,500.00 14,500.00 29,000.00 Liabilities Paid (194,000.00) (194,000.00) - - - 58,000.00 - - - 14,500.00 14,500.00 29,000.00 Liquidation Expenses Paid (42,000.00) - - (10,500.00) (10,500.00) (21,000.00) 16,000.00 - - - 4,000.00 4,000.00 8,000.00 Payment to Partners (16,000.00) (4,000.00) (4,000.00) (8,000.00) Balances at the end of Liquidation - - - - - - Schedule of Safe Payments to Partners Butler Osman Ward Capital Balances 195,900.00 25,900.00 133,800.00 Potential Loss - Liquidation Exp. (14,500.00) (14,500.00) (29,000.00) Safe Payment to Partners 181,400.00 11,400.00 104,800.00
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