Question

Liquidation schedule—positive capital accounts The ABC partnership reports the following condensed balance sheet: Cash $200,000 Liabilities...

Liquidation schedule—positive capital accounts
The ABC partnership reports the following condensed balance sheet:

Cash $200,000 Liabilities $300,000
Noncash assets 600,00 Partner A, capital 125,000
Partner B, capital 125,000
Partner C, capital 250,000
Total assets $800,000 Total liabilities and partner capital $800,000

The partners wish to liquidate the partnership. The noncash assets are sold for $450,000 with the loss distributed to the partners in the ratio of 30%/30%/40% to partner A, B, and C, respectively. The liabilities are paid in full. Prepare a schedule detailing the liquidation of the assets, repayment of the liabilities, and distribution of the remaining cash to the partners.

HINT: Use a negative sign with answers that reduce account balances.

Liquidation Schedule of ABC Partnership

-----Capital Accounts----- CashNoncash AssetsLiabilities ABCCapital account, prior to liquidation$Answer$Answer$Answer $Answer$Answer$AnswerSale of noncash assetsAnswerAnswerAnswer AnswerAnswerAnswer AnswerAnswerAnswer AnswerAnswerAnswerPayment of creditorsAnswerAnswerAnswer AnswerAnswerAnswer AnswerAnswerAnswer AnswerAnswerAnswerDistribution to partnersAnswerAnswerAnswer AnswerAnswerAnswerPost-liquidation balances$Answer$Answer$Answer $Answer$Answer$Answer

Homework Answers

Answer #1
30% 30% 40%
Partners' Capital Accounts
Debit (Credit) Cash Noncash Assets Liabilities A B C
Balance prior to liquidation 200000 600000 300000 125000 125000 250000
Sale of noncash assets 450000 -600000 0 -45000 -45000 -60000
650000 0 300000 80000 80000 190000
Payment of creditors -300000 0 -300000 0 0 0
350000 0 0 80000 80000 190000
Distribution to partners -350000 0 0 -80000 -80000 -190000
Post-liquidation balances 0 0 0 0 0 0
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