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Question: the partnership of frick wilson and clarke has elected to...

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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:

Cash $ 66,000 Liabilities $ 46,000
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

Part A

Prepare a predistribution plan for this partnership

Part B

The following transactions occur in liquidating this business:

  1. Distributed cash based on safe capital balances immediately to the partners. Liquidation expenses of $10,000 are estimated as a basis for this computation.
  2. Sold noncash assets with a book value of $98,000 for $66,000.
  3. Paid all liabilities.
  4. Distributed cash based on safe capital balances again.
  5. Sold remaining noncash assets for $53,000.
  6. Paid actual liquidation expenses of $8,000 only.
  7. 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.

Frick Capital Wilson, Capital Clarke, Capital Beginning balances Loss Step one balances Loss Step two balances Loss Final balances

FRICK, WILSON, AND CLARKE Statement of Partnership Liquidation Final Balances Frick, Wilson Liabilities Capital Capta Capital Clarke Cash Noncash Assets 60% 20% 20% Beginning balances Distribution Updated balances Noncash assets sold Updated balances Liabilities paid Updated balances First (remainder of first distribution) Next Next Updated balances Noncash assets sold Updated balances Liquidation expenses paid Updated balances Final distribution based on ending capital account balances Ending balance $ 66,000 $ 231,000 $ 46,000 $ 135,000$ 37,000$ 79,000

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