(The following information applies to the questions displayed below.) The partnership of Butler, Osman, and Ward 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 $35,000 are expected. The partnership balance sheet at the start of liquidation is as follows: Cash Accounts receivable Office equipment (net) Building (net) $ 31, 000 61, 000 51, 000 115, 000 105, 000 $ 363, 000 $ 171, 000 31, 000 55, 000 31, 000 75, 000 $ 363, 000 Liabilities Butler, loan Butler, capital (25%) Osman, capital (25%) Ward, capital (50%) Land Total assets Total liabilities and capital following transactions transpire in chronological order during the liquidation of the partnership: Collected 90 percent of the accounts receivable and wrote the remainder off as uncollectible. sold the office equipment for $20,500, the building for $82,000, and the land for $124,000. Distributed safe payments of cash. aid all liabilities in full. Paid actual liquidation expenses of $30,500 only. Made final cash distributions to the partners. pare journal entries to record these liquidation transactions. (If no entry is required for a transaction/event, select "No journal -y required" in the first account field.)
(The following information applies to the questions displayed below.) The partnership of Butler, Osman, and Ward 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 $35,000 are expected. The partnership balance sheet at the start of liquidation is as follows: Cash Accounts receivable Office equipment (net) Building (net) $ 31, 000 61, 000 51, 000 115, 000 105, 000 $ 363, 000 $ 171, 000 31, 000 55, 000 31, 000 75, 000 $ 363, 000 Liabilities Butler, loan Butler, capital (25%) Osman, capital (25%) Ward, capital (50%) Land Total assets Total liabilities and capital following transactions transpire in chronological order during the liquidation of the partnership: Collected 90 percent of the accounts receivable and wrote the remainder off as uncollectible. sold the office equipment for $20,500, the building for $82,000, and the land for $124,000. Distributed safe payments of cash. aid all liabilities in full. Paid actual liquidation expenses of $30,500 only. Made final cash distributions to the partners. pare journal entries to record these liquidation transactions. (If no entry is required for a transaction/event, select "No journal -y required" in the first account field.)
Chapter11: Partnerships: Distributions, Transfer Of Interests, And Terminations
Section: Chapter Questions
Problem 27P
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Transcribed Image Text:[The following information applies to the questions displayed below.)
The partnership of Butler, Osman, and Ward 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 $35,000 are expected. The partnership balance sheet at the start of liquidation is as follows:
$ 171, 000
$ 31, 000
61, 000
51, 000
115, 000
105, 000
$ 363, 000
Cash
Liabilities
Butler, loan
Butler, capital (25%)
Osman, capital (25%)
Ward, capital (50%)
Total liabilities and capital
Accounts receivable
Office equipment (net)
Building (net)
31, 000
55, 000
31, 000
75, 000
Land
Total assets
$ 363, 000
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 $20,500, the building for $82,000, and the land for $124,000.
3. Distributed safe payments of cash.
4. Paid all liabilities in full.
5. Paid actual liquidation expenses of $30,500 only.
6. Made final cash distributions to the partners.
Prepare journal entries to record these liquidation transactions. (If no entry is required for a transaction/event, select "No journal
entry required" in the first account field.)
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