The partnership of Garcia, Iglesias, and Kassabian was formed several years ago as a local tax preparation
Question:
The partnership of Garcia, Iglesias, and Kassabian was formed several years ago as a local tax preparation firm. Two partners have reached retirement age, and the partners have decided to terminate operations and liquidate the business. Liquidation expenses of $34,000 are expected. The partnership balance sheet at the start of liquidation is as follows:
Part A
Prepare a predistribution plan for this partnership.
Part B
The following transactions transpire in chronological order during the liquidation of the partnership:
1. Collected 90 percent of the accounts receivable and wrote the remainder off as uncollectible.
2. Sold the office equipment for $20,000, the building for $80,000, and the land for $120,000.
3. Distributed safe payments of cash.
4. Paid all liabilities in full.
5. Paid actual liquidation expenses of $30,000 only.
6. Made final cash distributions to the partners.
Prepare journal entries to record these liquidation transactions.
Step by Step Answer:
Advanced Accounting
ISBN: 9781264798483
15th Edition
Authors: Joe Ben Hoyle, Thomas Schaefer And Timothy Doupnik