Part C Prepare journal entries to record the liquidation transaction.docx

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Solution The question is really long and a lot of complex calculations are involved. I will try to answer as many parts as I can. ___________________ Part A) PREDISTRIBUTION PLAN 1) Payment of liabilities and liquidation expenses is required to be assured. Next $32,000 goes to Clarke. 2) Next $28,000 is split between Frick and Clarke on a 60:20 basis. 3) Any further cash is split among Frick, Wilson, and Clarke on a 60:20:20 basis. _______ _______ _____________________ Part B) .

Education

Part C
Prepare journal entries to record the liquidation transactions reflected in the final statement of
liquidation.
Solution
The question is really long and a lot of complex calculations are involved. I will try to answer as
many parts as I can.
___________________
Part A)
PREDISTRIBUTION PLAN
1) Payment of liabilities and liquidation expenses is required to be assured. Next $32,000 goes to
Clarke.
2) Next $28,000 is split between Frick and Clarke on a 60:20 basis.
3) Any further cash is split among Frick, Wilson, and Clarke on a 60:20:20 basis.
_______
_______
_____________________
Part B)
Schedule 1
Frick, Wilson, Clarke,
Capital Capital Capital
Beginning balances $123,000 $34,000 $73,000

Loss of $170,000 assumedâ€”Schedule 2 (allocated on a
60:20:20 basis)
($102,000) ($34,000) ($34,000)
Step One balances $21,000 $0 $39,000
Loss of $28,000 assumedâ€”Schedule 3 (allocated on a 60:20
basis)
($21,000) $0 ($7,000)
Step Two balances $0 $0 $32,000

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