Simple Liquidation
The CPA Partnership operated by Cook, Parks, and Argo is being liquidated. A balance sheet prepared at this stage in their liquidation process is presented below.
|
Cash |
$40,000 |
Liabilities |
$25,000 |
|
Other Assets |
50,000 |
Parks, Loan |
10,000 |
|
Cook, Capital |
30,000 |
||
|
Parks, Capital |
10,000 |
||
|
Argo, Capital |
15,000 |
||
|
Total |
$90,000 |
Total |
$90,000 |
The partners share profits and losses 30% (Cook), 50% (Parks), and 20% (Argo). The partners are all personally insolvent.
Required:
- The partners wish to distribute the $40,000 in cash. Record in journal entry form the distribution of the available cash.
- Record in journal entry form the completion of the liquidation process, assuming that the other assets of $50,000 are sold for $15,000.