How to record the liquidation entries for a partnership
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Our partnership is not doing well and we have decided to liquidate our partnership. Partners 2 is concerned. Tribbs has plenty of money, partner 1 is personally bankrupt. The partnership sells the apartment building for $165,000, which is a loss from its book value of $189,000.
Capital Capital Capital
Cash Assets Liabilities Tribbs Partner 1 Partner 2
Profit and Loss 45% 25% 30%
Percent
Balances $2,000 $189,000 -$80,000 -$64,000 -$5,000 -$42,000
Using these balances, show the sale of the apartment building, payment of liabilities, and payments to the partners in liquidation of the partnership.
In the memo, comment on Bob's status in relation to the other partners.
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Solution Summary
The problem asked for help in setting up the problem to come to a solution. A partnership will sell its one asset, distribute funds and liquidate. The solution lays out the steps in the order in which they need to be prepared and then includes either the journal entries or the calculation of the amounts for the journal entries.
Solution Preview
I assume the instructor wants a spreadsheet with a trial balance and a distribution of capital by partner.
Set up a trial balance and enter your amounts. Total capital is $111K.
A = L & P
2,000 ...
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