The partnership of Frick, Wilson, and Clarke has elected to cease all operations
ID: 2481922 • 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:
$348,000
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. (Do not round intermediate calculations.)
Part B: PREPARE JOURNAL ENTRIES:
1. Record the entry for initial cash payments made to partners in accordance with predistribution plan.
2. Record the allocation of losses to partners on sale of noncash assets.
3. Record the extinguishment of all partnership liabilities.
4. Record the entry for cash payments made to partners in accordance with predistribution plan.
5. Record the allocation of losses to partners on sale of remaining noncash assets.
6. Record the payment of liquidation expenses.
7. Record the entry for final cash payments made to partners based on ending capital balances.
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:
Explanation / Answer
1.Distributed in ratio of safe capital 168:45 :95
Frick capital 33,818
Wilson capital 9059
Clarke Capital 19123
Cash $62,000
2. Cash $69,000
Loss on assets $45,000
Non cash assets $114,000
Loss distributed in ratio of 60:20:20
Frick capital 27,000
Wilson capital 9,000
Clarke Capital 9,000
loss on assets $45,000
3. Liabilities $40,000
Cash $40,000
4. Distributed on safe capital ratio
Frick capital 10,363
Wilson capital 2,776
Clarke Capital 5861
Cash $19,000
5.
Cash $61,000
Loss on assets $104,000
Non cash assets $165,000
Loss distributed in ratio of 60:20:20
Frick capital 62,400
Wilson capital 20,800
Clarke Capital 20,800
loss on assets 104,000
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