Journalizing the liquidation of a partnership firm.
The partners of the RichMax Company decide to liquidate the firm on 3/31/08.
RichMax Company
Balance Sheet
3/31/08
|
Assets
|
|
Liabilities and Owners Equity
|
|
|
Cash
|
$30,000
|
Notes Payable
|
$17,000
|
|
Accounts Receivable
|
33,000
|
Accounts Payable
|
24,000
|
|
Allowance for Doubtful A/C
|
(2,000)
|
Wages Payable
|
2,000
|
|
Merchandise Inventory
|
24,000
|
Rich, Capital
|
22,000
|
|
Equipment
|
10,000
|
Max, Capital
|
21,000
|
|
Accumulated Depreciation, Eqt
|
(8,000)
|
Rudy, Capital
|
1,000
|
|
Total
|
$87,000
|
Total
|
$87,000
|
The partners share income and loss in the ratio 1:2:3. During the process of liquidation, the following transactions were completed.
a. A total of $42,000 was received from the sale of all of the non-cash assets.
b. Liabilities were paid in full.
c. Rudy was unable to pay his capital deficiency.
d. The final cash distribution was made to the partners.
Prepare the journal entries to record the liquidation.