Question: the partnership of frick wilson and clarke has elected to...
The partnership of Frick, Wilson, and Clarke has elected to cease all operations and liquidate its business property. A balance sheet drawn up at this time shows the following account balances:
|Noncash assets||231,000||Frick, capital (60%)||135,000|
|Wilson, capital (20%)||37,000|
|Clarke, capital (20%)||79,000|
|Total assets||$||297,000||Total liabilities and capital||$||297,000|
Prepare a predistribution plan for this partnership
The following transactions occur in liquidating this business:
- Distributed cash based on safe capital balances immediately to the partners. Liquidation expenses of $10,000 are estimated as a basis for this computation.
- Sold noncash assets with a book value of $98,000 for $66,000.
- Paid all liabilities.
- Distributed cash based on safe capital balances again.
- Sold remaining noncash assets for $53,000.
- Paid actual liquidation expenses of $8,000 only.
- Distributed remaining cash to the partners and closed the financial records of the business permanently.
Produce a final statement of liquidation for this partnership using the predistribution plan to determine payments of cash to partners based on safe capital balances.