Reference no: EM134029878

Question

The partnership of Garcia, Iglesias, and Kassabian was formed several years ago as a local tax preparation firm. Two partners have reached retirement age, and the partners have decided to terminate operations and liquidate the business. Liquidation expenses of $34,000 are expected. The partnership balance sheet at the start of liquidation is as follows: Cash $ 30,000 Liabilities $ 170,000 Accounts receivable 60,000 Garcia, loan 30,000 Office equipment (net) 50,000 Garcia, capital (25%) 50,000 Building (net) 110,000 Iglesias, capital (25%) 30,000 Land 100,000 Kassabian, capital (50%) 70,000 Total assets $ 350,000 Total liabilities and capital $ 350,000 The following transactions transpire in chronological order during the liquidation of the partnership: Collected 90 percent of the accounts receivable and wrote the remainder off as uncollectible. Sold the office equipment for $20,000, the building for $80,000, and the land for $120,000. Distributed safe payments of cash. Paid all liabilities in full. Paid actual liquidation expenses of $30,000 only. Made final cash distributions to the partners.