The partnership of Butler, Osman, and Ward was formed several years ago as a local tax preparation firm. Two partnershave reached retirement age, and the partners have decided to terminate operations and liquidate the business.Liquidation expenses of $47,000 are expected. The partnership balance sheet at the start of liquidation is as follows:CashAccounts receivableOffice equipment (net)Building (net)LandTotal assets$ 43,00073,00063,000175,000165,000$ 519,000Liabilities$ 183,000Butler, loan43,000Butler, capital (25%)115,000Osman, capital (25%)43,000Ward, capital (50%)135,000Total liabilities and capital $ 519,000The 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 $26,500, the building for $130,000, and the land for $172,000.3. Distributed safe payments of cash.4. Paid all liabilities in full.5. Paid actual liquidation expenses of $36,500 only.6. Made final cash distributions to the partners.Prepare journal entries to record these liquidation transactions.

The liquidation transactions are the transactions which are incurred by the partnership when the…

Answered: Prepare journal entries to record these…

Business

Accounting

Prepare journal entries to record these liquidation transactions.

Century 21 Accounting General Journal

11th Edition

ISBN:9781337680059

Author:Gilbertson

Publisher:Gilbertson

Chapter23: Accounting For Partnerships

Section: Chapter Questions

Problem 3AP

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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 $51,000 are expected. The partnership balance sheet at the start of liquidation is as follows: Cash Accounts receivable Office equipment (net) Building (net) Land Total assets $ 47,000 77,000 67,000 195,000 185,000 $ 571,000 Liabilities Butler, loan Butler, capital (25%) Osman, capital (25%) Ward, capital (50%) Total liabilities and capital 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 $28,500, the building for $146,000, and the land for $188,000. 3. Distributed safe payments of cash. 4. Paid all liabilities in full. 5. Paid actual liquidation expenses…
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