Reference no: EM132937266
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
Noncash assets 150,000
Total assets $200,000
Liabilities $40,000
Alex, capital 90,000
Bess, capital 70,000
Total liabilities and capital $200,000
Part A - Prepare journal entries for the following transactions:
-Distributed safe cash payments to the partners.
-Paid $30,000 of the partnership's liabilities.
-Sold noncash assets for $160,000.
-Distributed safe cash payments to the partners.
-Paid remaining partnership liabilities of $10,000.
-Paid $4,000 in liquidation expenses; no further expenses will be incurred.
-Distributed remaining cash held by the business to the partners.
Part B - Prepare a final statement of partnership liquidation.
Textbook- Hoyle, Joe Ben, Schaefer, Thomas F, Doupnik, Timothy S: Advanced Accounting 13e, New York, NY: McGraw-Hill Education, 2016.