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Business · Accounting
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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:

Cash $ 69,000 Liabilities $ 40,000
Noncash assets 285,000 Frick, capital (60%) 171,000
Wilson, capital (20%) 46,000
Clarke, capital (20%) 97,000
Total assets $ 354,000 Total liabilities and capital $ 354,000

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 $116,000 for $69,000.
  3. Paid all liabilities.
  4. Distributed cash based on safe capital balances again.
  5. Sold remaining noncash assets for $62,000.
  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.

Answer
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