Advanced Accounting 12th Edition by Joe Ben Hoyle,Thomas Schaefer , Timothy Doupnik

Exercise 3

Part A
The partnership of Wingler, Norris, Rodgers, and Guthrie was formed several years ago as a local architectural firm. Several partners have recently undergone personal financial problems and have decided to terminate operations and liquidate the business. The following balance sheet is drawn up as a guideline for this process:

When the liquidation commenced, expenses of $16,000 were anticipated as being necessary to dispose of all property.
Prepare a predistribution plan for this partnership.
Part B
The following transactions transpire during the liquidation of the Wingler, Norris, Rodgers, and Guthrie partnership:
• Collected 80 percent of the total accounts receivable with the rest judged to be uncollectible.
• Sold the land, building, and equipment for $ 150,000.
• Made safe capital distributions.
• Learned that Guthrie, who has become personally insolvent, will make no further contributions.
• Paid all liabilities.
• Sold all inventory for $71,000.
• Made safe capital distributions again.
• Paid liquidation expenses of $ 11,000.
• Made final cash disbursements to the partners based on the assumption that all partners other than Guthrie are personally solvent.
Prepare journal entries to record these liquidation transactions.