Question

Fred and George have been in partnership for many years. Thepartners, who share profits and losses on a 60:40 basis,respectively, wish to retire and have agreed to liquidate thebusiness. Liquidation expenses are estimated to be $10,000. At thedate the partnership ceases operations, the balance sheet is asfollows:

  Cash$100,000     Liabilities$80,000  

  Noncash assets200,000    Fred, capital100,000 

  George, capital120,000 

  Total assets$300,000    Total liabilitiesand capital$300,000 

1.

Prepare journal entries for the following transactions:(Do not round intermediate calculations. If no entry isrequired for a transaction/event, select “No journal entryrequired” in the first account field.)

a.Distributed safe cash paymentsto the partners.

b.Paid $40,000 of thepartnership’s liabilities.

c.Sold noncash assets for$220,000.

d.Distributed safe cash paymentsto the partners.

e.Paid all remaining partnershipliabilities of $40,000.

f.Paid $8,000 in liquidationexpenses; no further expenses will be incurred.

g.Distributed remaining cash heldby the business to the partners.