The partnership of Frick, Wilson, and Clarke has elected to cease all operations
ID: 2411447 • Letter: T
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:
Part A
Prepare a predistribution plan for this partnership
Part B
The following transactions occur in liquidating this business:
1.Distributed cash based on safe capital balances immediately to the partners. Liquidation expenses of $8,000 are estimated as a basis for this computation.
2.Sold noncash assets with a book value of $94,000 for $60,000.
3.Paid all liabilities.
4.Distributed cash based on safe capital balances again.
5.Sold remaining noncash assets for $51,000.
6.Paid actual liquidation expenses of $6,000 only.
7.Distributed remaining cash to the partners and closed the financial records of the business permanently.
Produce a final statement of liquidation for this partnership using the predistribution plan to determine payments of cash to partners based on safe capital balances.
Part C
Prepare journal entries to record the liquidation transactions reflected in the final statement of liquidation.
Use templete below
Partnership Liquidation Schedule
.
Produce a schedule of liquidation
FRICK, WILSON, AND CLARKE
Schedule of Partnership Liquidation
Final Balances
Cash
Noncash Assets
Liabilities
Frick,
Capital
(60%)
Wilson,
Capital (20%)
Clarke,
Capital
(20%)
Beginning balances $60,000 $219,000 $40,000 $129,000 $35,000 $75,000
Distribution of $4,000 (cash in excess of liabilities and estimated liquidation expenses) in accordance with pre-distribution plan
Updated balances
Noncash assets sold
Updated balances
All liabilities are paid
Updated balances
Distribution of $48,000 (cash in excess of liabilities and estimated liquidation expenses) in accordance with pre-distribution plan
First distribution
Next
Next
Updated balances
Noncash assets sold
Updated balances
Paid liquidation expenses
Updated balances
Final distribution based on ending capital account balances
Ending balance $-0- $-0- $-0- $-0- $-0- $-0
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 60,000 Noncash assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219,000 Total assets? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 279,000 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 40,000 Frick, capital (60%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129,000 Wilson, capital (20%)? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,000 Clarke, capital (20%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,000 Total liabilities and capital? . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 279,000Explanation / Answer
Part B:
Part C:
FRICK, WILSON AND CLARKE Statement of Partnership Liquidation Event Transaction Cash Non-cash assets Liabilities Frick, capital 60% Wilson, capital 20% Clarke, capital 20% Beginning Balances 60000 219000 40000 129000 35000 75000 1 Distribution of safe cash -12000 -7200 -2400 -2400 Updated balances 48000 219000 40000 121800 32600 72600 2 Non-cash assets sold 60000 -94000 -20400 -6800 -6800 Updated balances 108000 125000 40000 101400 25800 65800 3 Payment of liabilities -40000 -40000 Updated balances 68000 125000 0 101400 25800 65800 4 Distribution of safe cash -60000 -36000 -12000 -12000 Updated balances 8000 125000 0 65400 13800 53800 5 Non-cash assets sold 51000 -125000 -44400 -14800 -14800 Updated balances 59000 0 0 21000 -1000 39000 6 Lquidation Expenses -6000 -3600 -1200 -1200 Updated balances 53000 0 0 17400 -2200 37800 7 Final distribution -53000 -17400 2200 -37800 Updated balances 0 0 0 0 0 0Related Questions
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