Problem:
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.