The partnership of Garcia, Iglesias, and Kassabian was formed several years ago 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:

Part A

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 $20,000, the building for $80,000, and the land for $120,000.

3. Distributed safe payments of cash.

4. Paid all liabilities in full.

5. Paid actual liquidation expenses of $30,000 only.

6. Made final cash distributions to the partners.

Prepare journal entries to record these liquidation transactions.

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Cash Accounts receivable. Office equipment (net). Building (net) ... Land....... Total assets.. $ 30,000 60,000 50,000 110,000 100,000 $350,000 Liabilities... Garcia, loan Garcia, capital (25%). Iglesias, capital (25%).. Kassabian, capital (50%). . Total liabilities and capital.... $170,000 30,000 50,000 30,000 70,000 $350,000