Journalizing the liquidation of a partnership firmthe

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Journalizing the liquidation of a partnership firm.

The partners of the RichMax Company decide to liquidate the firm on 3/31/08.

RichMax Company
Balance Sheet
3/31/08

Assets

 

Liabilities and Owners Equity

 

Cash

$30,000

Notes Payable

$17,000

Accounts Receivable

33,000

Accounts Payable

24,000

Allowance for Doubtful A/C

(2,000)

Wages Payable

2,000

Merchandise Inventory

24,000

Rich, Capital

22,000

Equipment

10,000

Max, Capital

21,000

Accumulated Depreciation, Eqt

(8,000)

Rudy, Capital

1,000

Total

$87,000

Total

$87,000

The partners share income and loss in the ratio 1:2:3. During the process of liquidation, the following transactions were completed.

a. A total of $42,000 was received from the sale of all of the non-cash assets.
b. Liabilities were paid in full.
c. Rudy was unable to pay his capital deficiency.
d. The final cash distribution was made to the partners.

Prepare the journal entries to record the liquidation.

Reference no: EM13356745

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