The partnership of Du, Chong, and Smith has experienced operating losses for three consecutive years. The partners, who have shared profits and losses in the ratio of Jia Du, 10 percent, Denis Chong, 30 percent, and Alan Smith, 60 percent, are considering liquidating the business. They ask you to analyze the effects of liquidation under various possibilities about the sale of the noncash assets. They present the following partnership balance sheet amounts at December 31, 2020:

Required

1. Prepare a summary of liquidation transactions (as illustrated in the chapter) for each of the following situations:

a. The noncash assets are sold for $552,000.

b. The noncash assets are sold for $448,000.

2. Make the journal entries to record the liquidation transactions in Requirement 1(b).

Transcribed Image Text:

Cash $ 70,000 Liabilities $316,000 Noncash assets 526,000 Jia Du, capital 80,000 Denis Chong, capital 102,000 Alan Smith, capital 98,000 Total assets $596,000 Total liabilities and equity $596,000