Business, 14.04.2020 18:54 arnold2619

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 $ 61,000
Liabilities $ 44,000
Noncash assets 213,000
Frick, capital (60%) 123,000
Wilson, capital (20%) 34,000
Clarke, capital (20%) 73,000
Total assets $ 274,000
Total liabilities and capital $ 274,000

Required:
(a) Prepare a predistribution plan for this partnership
(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.

Answers: 3

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