The ABC partnership reports the following condensed balance sheet: Cash $2,020,000 Liabilities $1,800,000 Noncash assets 3,670,000 Partner A, capital 1,750,500 Partner B, capital 1,750,500 Partner C, capital 389,000 Total assets $5,690,000 Total liabilities and partner capital $5,690,000 The partners wish to liquidate the partnership. The noncash assets are sold for $2,500,000 with the loss distributed to the partners in the ratio of 30%/30%/40% to partner A, B, and C, respectively. The liabilities are paid in full. Partners make any capital contribution that is necessary to offset a negative balance in their respective Capital Accounts. Required: Prepare a schedule detailing the liquidation of the assets, repayment of the liabilities, and distribution of the remaining cash to the partners.
The ABC partnership reports the following condensed balance sheet: Cash $2,020,000 Liabilities $1,800,000 Noncash assets 3,670,000 Partner A, capital 1,750,500 Partner B, capital 1,750,500 Partner C, capital 389,000 Total assets $5,690,000 Total liabilities and partner capital $5,690,000 The partners wish to liquidate the partnership. The noncash assets are sold for $2,500,000 with the loss distributed to the partners in the ratio of 30%/30%/40% to partner A, B, and C, respectively. The liabilities are paid in full. Partners make any capital contribution that is necessary to offset a negative balance in their respective Capital Accounts. Required: Prepare a schedule detailing the liquidation of the assets, repayment of the liabilities, and distribution of the remaining cash to the partners.
Related questions
Alex and Bess have been in partnership for many years. The partners, who share profits and losses on a 70:30 basis, respectively, wish to retire and have agreed to liquidate the business. Liquidation expenses are estimated to be $5,500. At the date the partnership ceases operations, the balance sheet is as follows:
| Cash | $ | 48,000 | Liabilities | $ | 36,000 |
| Noncash assets | 135,000 | Alex, capital | 94,500 | ||
| Bess, capital | 52,500 | ||||
| Total assets | $ | 183,000 | Total liabilities and capital | $ | 183,000 |
Part A: Prepare journal entries for the following transactions:
Distributed safe cash payments to the partners.
Paid $21,600 of the partnershipâs liabilities.
Sold noncash assets for $147,000.
Distributed safe cash payments to the partners.
Paid remaining partnership liabilities of $14,400.
Paid $4,100 in liquidation expenses; no further expenses will be incurred.
Distributed remaining cash held by the business to the partners.
Part B: Prepare a final statement of partnership liquidation.
