Hardin, Sutton, and Williams have operated a local business as a partnership for several years. All profits and losses have been allocated in a 3:2:1 ratio, respectively. Recently, Williams has undergone personal financial problems, and is insolvent. To satisfy Williams' creditors, the partnership has decided to liquidate.
The following balance sheet has been produced:
During the liquidation process, the following transactions take place:
- Noncash assets are sold for $116,000.
- Liquidation expenses of $12,000 are paid. No further expenses are expected.
- Safe capital distributions are made to the partners.
- Payment is made of all business liabilities.
- Any deficit capital balances are deemed to be uncollectible.
Prepare journal entries to record the actual liquidation transactions.
Definitions:
Directive
An instruction or order given by someone in authority.
Authentic
Refers to something genuine, not counterfeit or copied, and truly represents what it is said to be.
Gestalt Therapy
A type of therapy that highlights the importance of taking personal accountability and concentrates on the person's current experiences.
Self-actualization
The realization or fulfillment of one's talents and potentialities, considered as a drive or need present in everyone. It is the highest level of Maslow's hierarchy of needs.
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