The partnership of Butler, Osman, and Ward was formed several years as a local tax preparation firm.
Question:
The partnership of Butler, Osman, and Ward was formed several years 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:
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 $23,500, the building for $106,000, and the land for $148,000.
3. Made safe capital distributions.
4. Paid all liabilities in full.
5. Paid actual liquidation expenses of $33,500 only.
6. Made final cash distributions to the partners.
Prepare journal entries to record these liquidation transactions.
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon