In late June 2022, the Byron Bay Bookstore lost a court case, which imposed a judgement...

 

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In late June 2022, the Byron Bay Bookstore lost a court case, which imposed a judgement against the business of $90 000. Given the poor future prospects of the business, the partners decided to liquidate the business. The partners will settle the legal judgement from their personal resources following the liquidation of the business. The statement of financial position, not including the liability for the court case, is as follows: Byron Bay Bookstore Statement of Financial Position 14 June 2022 ASSETS LIABILITIES AND EQUITY Cash 70 000 Accounts Payable 60 000 Accounts Receivable 47 500 Wages Payable 5 000 Allowance for bad debts (2 500) Notes Payable 35 000 Inventory 70 000 C. Hemsworth, Capital 62 500 PPE Assets 42 500 B. Lee, Capital 28 000 Accum. Depp PPE Assets (25 000) B. Thor, Capital 12 000 Total assets 202 500 Total liabilities and equity 202 500 The partners share profits Hemsworth 65%, Lee 25% and Thor 10%. The process of liquidation resulted in: Required: 1. Total proceeds of $150 000 were received from the sale of non-cash assets 2. Liabilities being paid in full 3. The remaining cash being paid to each partner with a credit balance Provide all of the entries to record the liquidation process. Narrations / explanations are not required. Clearly show any workings in the space provided below. In late June 2022, the Byron Bay Bookstore lost a court case, which imposed a judgement against the business of $90 000. Given the poor future prospects of the business, the partners decided to liquidate the business. The partners will settle the legal judgement from their personal resources following the liquidation of the business. The statement of financial position, not including the liability for the court case, is as follows: Byron Bay Bookstore Statement of Financial Position 14 June 2022 ASSETS LIABILITIES AND EQUITY Cash 70 000 Accounts Payable 60 000 Accounts Receivable 47 500 Wages Payable 5 000 Allowance for bad debts (2 500) Notes Payable 35 000 Inventory 70 000 C. Hemsworth, Capital 62 500 PPE Assets 42 500 B. Lee, Capital 28 000 Accum. Depp PPE Assets (25 000) B. Thor, Capital 12 000 Total assets 202 500 Total liabilities and equity 202 500 The partners share profits Hemsworth 65%, Lee 25% and Thor 10%. The process of liquidation resulted in: Required: 1. Total proceeds of $150 000 were received from the sale of non-cash assets 2. Liabilities being paid in full 3. The remaining cash being paid to each partner with a credit balance Provide all of the entries to record the liquidation process. Narrations / explanations are not required. Clearly show any workings in the space provided below.