Alex and Bess have been in partnership for many years. The partners, who share profits and losses on a 60:40 basis, respectively, wish to retire and have agreed to liquidate the business. Liquidation expenses are estimated to be $8,500. At the date the partnership ceases operations, the balance sheet is as follows: Cash$57,000Liabilities$43,500Noncash assets 160,000Alex, capital 96,000 Bess, capital 77,500Total assets$217,000Total liabilities and capital$217,000 Part A: Prepare journal entries for the following transactions: Distributed safe cash payments to the partners.Paid $26,100 of the partnership’s liabilities.Sold noncash assets for $173,500.Distributed safe cash payments to the partners.Paid remaining partnership liabilities of $17,400.Paid $6,800 in liquidation expenses; no further expenses will be incurred.Distributed remaining cash held by the business to the partners.

A partnership is an organization formed by an agreement, usually a partnership deed between 2 or…

Answered: Alex and Bess have been in partnership…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Alex and Bess have been in partnership for many years. The partners, who share profits and losses on a 60:40 basis, respectively, wish to retire and have agreed to liquidate the business. Liquidation expenses are estimated to be $8,500. At the date the partnership ceases operations, the balance sheet is as follows:


Cash	$	57,000	Liabilities	$	43,500
Noncash assets		160,000	Alex, capital		96,000
			Bess, capital		77,500
Total assets	$	217,000	Total liabilities and capital	$	217,000

Part A: Prepare journal entries for the following transactions:

Distributed safe cash payments to the partners.
Paid $26,100 of the partnership’s liabilities.
Sold noncash assets for $173,500.
Distributed safe cash payments to the partners.
Paid remaining partnership liabilities of $17,400.
Paid $6,800 in liquidation expenses; no further expenses will be incurred.
Distributed remaining cash held by the business to the partners.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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