The partnership of Wing, Mehta, Rodgers, and Yan was formed several years ago as a local architectural
Question:
The partnership of Wing, Mehta, Rodgers, and Yan 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, liquidation expenses of $16,000 were anticipated as being necessary to dispose of all property.
Part APrepare a predistribution plan for this partnership.
Part B
The following transactions transpire during the liquidation of the Wing, Mehta, Rodgers, and Yan partnership:
1. Collected 80 percent of the total accounts receivable with the rest judged to be uncollectible.
2. Sold the land, building, and equipment for $150,000.
3. Distributed safe payments of cash.
4. Learned that Yan, who has become personally insolvent, will make no further contributions.
5. Paid all liabilities.
6. Sold all inventory for $71,000.
7. Distributed safe payments of cash again.
8. Paid actual liquidation expenses of $11,000 only.
9. Made final cash disbursements to the partners based on the assumption that all partners other than Yan are personally solvent.
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