The after-closing trial balances of the Bea, Pat, and Tim partnership at December 31, 2011, included the

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The after-closing trial balances of the Bea, Pat, and Tim partnership at December 31, 2011, included the following accounts and balances:

Cash ......................................................... $120,000

Accounts receivable-net ................................. 140,000

Inventory ..................................................... 200,000

Plant assets-net ............................................ 200,000

Trademarks ................................................... 20,000

Total debits ................................................ $680,000

Accounts payable ......................................... $150,000

Notes payable .............................................. 100,000

Bea capital (profit-sharing ratio, 50%) .................. 170,000

Pat capital (profit-sharing ratio, 30%) ................... 180,000

Tim capital (profit-sharing ratio, 20%) ................... 80,000

Total credits ................................................ $680,000

The partnership is to be liquidated as soon as possible, and all available cash except for a $10,000 contingency balance is to be distributed at the end of each month prior to the time that all assets are converted into cash.

During January 2012, $100,000 was collected from accounts receivable, inventory items with a book value of $80,000 were sold for $100,000, and available cash was distributed.

During February 2012, Bea received plant assets with a book value of $60,000 and a fair value of $50,000 in partial settlement of her equity in the partnership. Also during February, the remaining inventory items were sold for $60,000, liquidation expenses of $2,000 were paid, and a liability of $8,000 was discovered. Cash was distributed on February 28.

During March 2012, the plant assets were sold for $110,000, the remaining noncash assets were written off, final liquidation expenses of $5,000 were paid, and cash was distributed. The dissolution of the partnership was completed on March 31, 2012.

REQUIRED

Prepare a statement of partnership liquidation for the Bea, Pat, and Tim partnership for the period January 1 to March 31, 2012.

Liquidation
Liquidation in finance and economics is the process of bringing a business to an end and distributing its assets to claimants. It is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations when they are due....
Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...
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Advanced Accounting

ISBN: 978-0133451863

12th edition

Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith

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