Prepare the journal entries to record the liquidation

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Reference no: EM1315186

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: EM1315186

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