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Partnership Liquidation

Partnership Liquidation
The balance sheet of the ABC partnership just prior to liquidation appears below:

ABC PARTNERSHIP
Balance Sheet
December 31, 2010

Assets Liabilities and Owners' Equity

Cash $ 70,000 Liabilities $120,000
Noncash assets 190,000 Agler, Capital 20,000
Bell, Capital 80,000
Colaw, Capital 40,000
$260,000 $260,000

Other information:
1. The partners Agler, Bell, and Colaw share profits and losses in the ratio of 6:3:1.
2. The noncash assets are sold for $140,000.
3. The liabilities are paid in full.
4. The remaining assets are distributed to the partners. Assume that if any partner has a capital deficiency, he will not be able to pay the amount owed to the partnership.

Instructions
Prepare the entries to record the liquidation of the ABC partnership.

Solution Preview

Partnership Liquidation
The balance sheet of the ABC partnership just prior to liquidation appears below:

ABC PARTNERSHIP
Balance Sheet
December 31, 2010

Assets Liabilities and Owners' Equity

Cash $ 70,000 Liabilities $120,000
Noncash assets 190,000 Agler, Capital 20,000
Bell, Capital 80,000
Colaw, Capital 40,000
$260,000 $260,000

Other information:
1. The partners Agler, Bell, and Colaw share profits and losses in the ratio of 6:3:1.
2. The noncash assets are sold for $140,000.
3. The liabilities are paid in full.
4. The ...

Solution Summary

The solution explains the calculations relating to partnership liquidation

$2.19