Reference no: EM132672804

Question - Alex and Bess have been in partnership for many years. The partners, who share profits and losses on a 60:40 basis, respectively, wish to retire and have agreed to liquidate the business. Liquidation expenses are estimated to be $5,000. At the date the partnership ceases operations, the balance sheet is as follows:

Cash $ 50,000 Liabilities $ 40,000

Noncash assets 150,000 Alex, capital 90,000

Bess, capital 70,000

Total assets $ 200,000 Total liabilities and capital $ 200,000

Part A: Prepare journal entries for the following transactions:

a. Distributed safe cash payments to the partners.

b. Paid $30,000 of the partnership's liabilities.

c. Sold noncash assets for $160,000.

d. Distributed safe cash payments to the partners.

e. Paid remaining partnership liabilities of $10,000.

f. Paid $4,000 in liquidation expenses; no further expenses will be incurred.

g. Distributed remaining cash held by the business to the partners.

Part B: Prepare a final statement of partnership liquidation.

Prepare journal entries for the following transactions: (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

a. Distributed safe cash payments to the partners.

b. Paid $30,000 of the partnership's liabilities.

c. Sold noncash assets for $160,000.

d. Distributed safe cash payments to the partners.

e. Paid remaining partnership liabilities of $10,000.

f. Paid $4,000 in liquidation expenses; no further expenses will be incurred.

g. Distributed remaining cash held by the business to the partners.