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

Exercise 18

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:

Part A
Prepare journal entries for the following transactions:
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.
Part B
Prepare a final statement of partnership liquidation.