Reference no: EM131216843
Fred and George 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 $10,000. At the date the partnership ceases operations, the balance sheet is as follows: Cash $ 100,000 Liabilities $ 80,000 Noncash assets 200,000 Fred, capital 100,000 George, capital 120,000 Total assets $ 300,000 Total liabilities and capital $ 300,000 1. 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 $40,000 of the partnership’s liabilities.
c. Sold noncash assets for $220,000.
d. Distributed safe cash payments to the partners.
e. Paid all remaining partnership liabilities of $40,000.
f. Paid $8,000 in liquidation expenses; no further expenses will be incurred.
g. Distributed remaining cash held by the business to the partners.
2. Prepare a final statement of partnership liquidation.
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