Immediately Prior to the Process of Liquidation, Partners Micco, Niccum

question 145

Essay

Immediately prior to the process of liquidation, partners Micco, Niccum, and Orwell have capital balances of $70,000, $20,000, and $30,000, respectively. There is a cash balance of $10,000, noncash assets total $160,000, and liabilities total $50,000. The partners share net income and losses in the ratio of 2:2:1.Journalize the entries to record the liquidation outlined below, using Assets as the account title for the noncash assets and Liabilities as the account title for all creditors' claims.
(a)Sold the noncash assets for $80,000 in cash.
(b)Divided the loss on realization.
(c)Paid the liabilities.
(d)Received cash from the partner with the deficiency.
(e)Distributed the cash to the partners.

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Definitions:

Total Fixed Cost

The total of all expenses that do not vary with the amount of production or output.

Average Total Cost

The cost per unit of output, calculated by dividing the total production cost by the quantity of units produced.

Basketballs

Inflated balls used in the game of basketball, designed according to specific regulations in terms of size and weight.

MC

The additional cost of producing one more unit of a product or service.