Accounting Assignment
The partners share profits and losses as follows: Rachel, 50 percent; Adams, 30 percent; and Nixon, 20 percent. The partners are considering an offer of $180,000 for the accounts receivable, inventory, and plant and equipment as of September 30. The $180,000 will be paid to creditors and the partners in installments, the number and amounts of which are to be negotiated. The partners have decided to liquidate their partnership by installments instead of accepting the offer of $180,000. Cash is distributed to the partners at the end of each month. A summary of the liquidation transactions follows:
October
o $25,000 is collected on accounts receivable; balance is uncollectible.
o $20,000 received for the entire inventory.
o $1,500 liquidation expense paid.
o $40,000 paid to creditors.
o $10,000 cash retained in the business at the end of the month.
November
o $2,000 in liquidation expenses paid.
o As part payment of his capital, Nixon accepted an item of special equipment that he developed, which had a book value of $8,000. The partners agreed that a value of $12,000 should be placed on this item for liquidation purposes.
o $4,000 cash retained in the business at the end of the month.
December
o $150,000 received on sale of remaining plant and equipment.
o $1,000 liquidation expenses paid. No cash retained in the business.
Required:
Prepare a statement of partnership realization and liquidation with supporting schedules of safe payments to partners.
Text Book: Christensen, T., Cottrell, D., & Budd, C. (2019). Advanced financial accounting (12th ed.). New York, NY: McGraw-Hill.
Chapters 15 & 16.
Pearson Education. (n.d.). Partnership accounting.
Format your assignment according to the give formatting requirements:
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2. The response also includes a cover page containing the title of the assignment, the course title, the student's name, and the date. The cover page is not included in the required page length.
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