Fred and George have been in partnership for many years. The partners, who share

Question

Fred and George have been in partnership for many years. The partners, who share profits and losses on a 60:40 basis, respectively, wish to retire and have agreed to liquidate the business. Liquidation expenses are estimated to be $10,000. At the date the partnership ceases operations, the balance sheet is as follows: Cash $ 100,000 Liabilities $ 80,000 Noncash assets 200,000 Fred, capital 100,000 George, capital 120,000 Total assets $ 300,000 Total liabilities and capital $ 300,000

The boxes with NA will be updated as you put in the data with the questions mark. Thanks for your help!

N/A Cash Noncash Assets Liabilities Fred, Capital George, Capital Beginning Balances 100,000 200,000 (80,000) (100,000) (120,000) Distribution to Partners ? ? ? ? ? Paid Liabilities (40,000) ? 40,000 ? ? Sold Noncash Assets ? (200,000) ? ? ? Updated Balances NA NA NA NA NA Distribution to Partners ? ? ? ? ? Updated Balances NA NA NA NA NA Paid Liabilities (40,000) ? 40,000 ? ? Paid Liquidation Expensens ? ? ? ? ? Updated Balances NA NA NA NA NA Distribution to Partners ? ? ? ? ? Closing Balances NA NA NA NA NA

Explanation / Answer

Particulars Cash Non cash assets Liabilities Fred, Capital George, Capital Beginning Balances $100,000 $200,000 ($80,000) ($100,000) ($120,000) Distribution to Partners - - - - - Paid Liabilities ($40,000) - $40,000 - - Sold Non Cash Assets $200,000 ($200,000) - - - Updated Balances $260,000 - ($40,000) ($100,000) ($120,000) Distribution to Partners ($10,000) - - $6,000 $4,000 Updated Balances $250,000 - ($40,000) ($94,000) ($116,000) Paid Liabilities ($40,000) - $40,000 - - Updated Balances $210,000 - - ($94,000) ($116,000) Distribution to Partners ($210,000) - - $94,000 $116,000 Closing Balances - - - - -

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