Reference no: EM132953351

lex 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 $7,500.

At the date the partnership ceases operations, the balance sheet is as follows:

Cash $55,000
Liabilities $42,500
Noncash assets 140,000
Alex, capital 84,000
Bess, capital 68,500
Total assets $195,000
Total liabilities and capital $195,000

Problem 1: Prepare journal entries for the following transactions that occurred in chronological order:

Distributed safe cash payments to the partners.
Paid $25,500 of the partnership's liabilities.
Sold noncash assets for $152,500.
Distributed safe cash payments to the partners.
Paid remaining partnership liabilities of $17,000.
Paid $6,000 in liquidation expenses; no further expenses will be incurred.
Distributed remaining cash held by the business to the partners.

Problem 2: final statement of partnership liquidation.